New research from a major corporate climate action group, Transition Pathway Initiative (TPI), has found that just 29% of the largest publicly-listed industrial companies are on course to align their emissions with those laid out in the Paris Agreement by 2030.
Photo: Ralph Gant / Wikimedia Licence: CC BY-SA
While the number is up, from 24% in mid-2018, and the companies are aligned with the emission reductions pledged by national governments in the Paris Agreement, TPI has warned that the pledges are not sufficient to keep global warming below dangerous levels.
The report also find that less than one in five (19%) companies are aligned with a pathway to keep global warming at 2°C or below.
TPI assessed the Carbon Performance - the quantitative benchmarking of companies' emissions against the Paris pledges - of 72 companies, including Rio Tinto, Alcoa and ArcelorMittal, and covered four sub-sectors: paper, cement, steel and aluminium. In total, it covered 24 steel companies, 18 paper, 22 cement and eight aluminium. The chemical sector was not included in the carbon performance study as more detailed disclosure is required than that which the sector currently provides in order to make an assessment.
The report also looked at Management Quality on climate for 100 companies across five sectors, including chemicals. This section looked at companies' governance of emissions and the risks and opportunities that arise from the low-carbon transition.
It is estimated that industry accounts for around 20% of global greenhouse emissions. The five sectors covered in the Management Quality sector produce over two-thirds of those industrial CO2 emissions.
In terms of carbon performance, the report found that the aluminium and steel sectors had shown no improvement, and were doing “only slightly better than oil and gas producers, and airlines".
TPI said that industry as a whole was moving too slowly as whole to do its part in limiting global to the 2°C or below target.
The research was carried out for TPI by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.
Faith Ward, TPI Co-Chair and Chief Responsible Investment Officer at Brunel Pension Partnership, said: “Industrial sectors like steel and cement face tough challenges to decouple emissions from production, but make no mistake, these industries must transform themselves if they are to survive the low carbon transition and play their part in achieving the goals of the Paris Agreement."
"Today’s TPI data shows it can be done – with 14 companies now aligned with a path to keep global warming below 2°C. Yet most industrial companies are significantly off-track on climate and that is an abdication of corporate risk management that must be urgently corrected," added Ward.
Some progress has been made however. The report found that the 29% of the companies that had plans to align their emissions with the 2030 Paris Agreement target had risen by 5%. There has also been a significant rise in companies disclosing their emissions - up to 75% from 61% in 2018. TPI said that most of these companies were listed in Asia (especially China) and Russia.
The report also named the cement sector as having shown particular signs of improvement. It found there had been an increase in the number of companies aligned with, or going beyond, the Paris pledges had risen from two to five since 2018.
The steel sector had made "a significant improvement" in climate management quality, but had not improved its Carbon Performance with just six out of 24 companies being at least in line with the Paris pledges.
Craig Martin, Chief Pensions Officer at the Environment Agency Pension Fund, one of the bodies which established the TPI, said: “Responding to the climate emergency is an urgent priority for us as long-term investors, and TPI data helps us to do that. The latest research shows that within the industrial sector there are clear winners and losers emerging on climate, which will guide our investment decisions and engagements in the years to come.”
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