None of the world's largest greenhouse gas-emitting companies have fully disclosed how they will achieve net-zero emissions by 2050 or sooner, investors have warned.
The Climate Action 100+ investor group's first Net-Zero Company Benchmark – which assesses the progress of 159 companies tackling climate change – also shows that none are performing at a high level across nine key performance indicators.
Although 83 firms have announced an ambition to achieve net zero by 2050, roughly half of these commitments do not cover the full scope of their most material emissions.
Moreover, only six companies have explicitly committed to aligning their future capital expenditures with long-term emissions reduction targets.
Andrew Gray, steering committee member of the Climate Action 100+ group, said that the new benchmark will help climate change engagement with investors “go to the next level”.
“The ability to measure through benchmarking means investors can set a base to track the progress of companies in relation to their management of climate change investment risks and opportunities,” he continued.
“It creates much needed clarity for both investors and companies in climate change engagement, which will enable better management of the investment risks and opportunities from climate change.”
Climate Action 100+ is a group of more than 575 investors with $54trn (£39trn) in assets under management, which engages with companies to to improve governance, curb emissions, and strengthen climate-related financial disclosures.
While some companies in a range of sectors are ahead of their peers in making progress towards some of the disclosure and decarbonisation strategy indicators, all companies have more work ahead.
A total of 139 focus firms assessed have board-level oversight of climate change, but only a third tie executive remuneration directly to their emission reduction targets.
Three-quarters have committed to align their disclosures with the Task Force on Climate-related Financial Disclosures' (TCFD) recommendations, and/or support these, but just 10% use climate-scenario planning that includes the 1.5°C scenario and encompasses the entire company.
There is also a “critically important need” for corporates to establish more robust short- and medium-term emission targets to achieve their ambitions, according to the researchers.
Laetitia Tankwe, chair of the Climate Action 100+ steering committee, said: “There are gaps in the information that is available to us – gaps we will seek to close as the benchmark evolves – however, together we have built a tool that will help investors differentiate climate leaders from laggards.”
Image credit: iStock
Author: Chris Seekings