Credible net-zero emission commitments from the world's largest companies in the highest-emitting sectors have more than doubled over the last year, the £18trn-backed Transition Pathway Initiative (TPI) has found.
Published today, the TPI's annual State of Transition 2021 report shows that 35 companies now have credible net-zero targets covering the most material emissions of their firm, up from 14 a year ago.
The findings also show that 17% of companies assessed for actual and projected emissions intensity are now are aligned with a pathway to limit temperature rises to 2°C above pre-industrial levels by 2050.
Furthermore, many of the companies studied, which include household names like BMW and BP, also have intermediate targets for significant decarbonisation before 2050.
Adam Matthews, TPI chair and chief responsible investment officer for the Church of England's pensions board, said that a “decade of transition” has started, with investors now able to clearly see which companies are serious about taking action on climate change.
“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,” he added.
A total of 401 companies were assessed for climate governance and management, while 292 firms were examined for actual and projected emissions intensity.
The findings also show that climate governance scores remain similar to last year, indicating that companies have established climate policies, but have yet to adopt strategic carbon management practices.
There has also been a 3% rise in companies aligned with limiting temperature rises to 2°C by 2030 among firms where multi-year data is available. The average target year for all sectors is now 2039, up from 2032 from last year.
Electric utilities companies have reduced their emissions the most compared to other sectors over the last 12 months, and are on track to meet their 2030 targets, but their 2050 ambitions are still well out of reach at current rates.
“As we enter the decade of transition, having only 17% of companies with credible net-zero commitments is not enough,” Matthews continued. “As investors, we need to work with companies to ensure that they are aligned with a pathway to keep global warming at 1.5°C.”
Image credit: iStock
Author: Chris Seekings