A global initiative backed by investors responsible for $23trn (£17trn) in assets has warned that less than a quarter of the world's largest transport companies have emission reduction plans aligned with the Paris Agreement.
In a report published today, the Transition Pathway Initiative (TPR) reveals that just 23% of the 62 largest firms have emission plans in line with limiting global warming to 2°C above pre-industrial levels by 2030.
Only 18% have plans aligned with a 2°C or below pathway by 2050, with the researchers warning that transport assets, including vehicles, factories and infrastructure, are in danger of becoming “stranded”.
This is a particular problem for Aviation, which is lagging behind all other transport industries. The findings show that 91% of airline companies are failing to align with even the least ambitious targets of the Paris Agreement, compared with 48% of firms in the automobile sector.
Avoiding stranded assets has become an even more daunting challenge due to the mass disruption brought on by COVID-19, with the TPI warning that transportation now faces a “moment of reckoning”.
“This year’s severe drop in travel has accelerated change in global transport,” said Emma Howard Boyd, co-founder of the TPI. “No one wanted this to happen the way it has, and everyone wants to protect the jobs of the hard-working employees of the sector.
“For investors, transition risks remain, with transport assets including vehicles, factories and infrastructure in danger of becoming stranded.”
The transport sector drives demand for fossil fuels and is responsible for nearly one-quarter of total energy-related CO2 emissions worldwide.
One reason for aviation’s poor performance in today's findings is its wide use of carbon offsets to contribute to emission reduction plans, such as tree-planting initiatives.
The TPI methodology discounts these, partly due to uncertainty in quantifying them, and because emission reductions must be achieved directly within the aviation sector itself to be comparable with assessments of other industries.
Encouragingly, today’s data shows six airlines have this year committed to gross emissions targets that exclude the use of offsets, including Azul, EasyJet, IAG, Turkish Airlines, United Airlines and Wizz Air.
“The latest TPI report on the sector highlights how much there is to do for the various industries included in the sector to build back greener,” said Euan Stirling, global head of stewardship & ESG investment at Aberdeen Standard Investments, a TPI partner.
“It helps us understand as investors what we can do to influence positively and where to target our efforts.“
Image credit: iStock
Author: Chris Seekings