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The number of companies committing to credible net zero targets more than doubled over the last year, but no corporate sector is cutting emissions fast enough to meet 2050 net zero targets, according to Transition Pathway Initiative (TPI).
The report by TPI, which is supported by more than 100 investors that jointly manage nearly $25trn in assets, revealed the number of companies with high quality, credible net zero targets, has more than doubled this year to 35. Volkswagen and Enel are among the new companies to adopt credible net zero targets this year.
401 companies from 16 business sectors are covered by the TPI State of Transition Report 2021. These companies represent approximately 16% of global market value and a much larger share of global greenhouse gas emissions from listed companies.
Most companies in the TPI universe “now have basic carbon management practices in place”, such as a policy commitment to act on climate change and disclosure of operational greenhouse gas emissions,” but most companies are still not taking a truly strategic approach to the issue”, the report said.
Adam Matthews, chair of TPI, said, “The decade of transition has started, and equity and debt investors can now clearly identify those companies who are serious about taking action on climate change and those that are not. These are companies with long-term climate commitments accompanied by clear milestones that don’t kick tough decisions into the long grass, and a comprehensive scope that covers all material emissions in a firm’s supply chain.
“In most sectors, companies are not reducing emissions fast enough to hit their 2030 targets. In no sector are companies reducing emissions fast enough to meet their 2050 targets.
On carbon performance, the report found 15% of companies now align with the most ambitious Below 2°C benchmark in 2050, 2% align with 2°C, but 47% do not align with any of the benchmarks and 16% provide insufficient disclosure.
Although an increasing number of companies now have net zero commitments, “they often fail to cover the most significant emissions”, the report said, given the example of net zero pledges in the oil and gas sector that typically cover operational emissions and only sometimes include downstream emissions from the use of companies’ products.
Source, ESG BLOG, Investment Week
Link to the article: https://www.investmentweek.co.uk/analysis/4009648/no-corporate-sector-is-cutting-emissions-fast-enough-to-meet-2050-net-zero-targets