Updated: FTSE 100 firms' emission targets fall short of UK's carbon budget

The carbon emission reduction targets adopted by the UK's largest firms remain well short of what is required if the UK is to meet the legally binding targets set out in its Climate Change Act.

That is the stark conclusion of a new report from the Carbon Disclosure Project (CDP), which analysed the emission reduction targets adopted by UK FTSE 100 firms and found that the most carbon-intensive sectors have announced emission reduction targets that are out of synch with those adopted by the government

Under the 2008 Act, successive governments are legally required to cut carbon emissions 80 per cent by 2050 and release five-year budgets detailing the rate of emission reductions. The first three five-year budgets were released last year and require the UK to cut emissions to at least 34 per cent below 1990 emissions by 2020.

According to the CDP report, the average annual greenhouse gas emissions reduction rate for FTSE 100 company targets is 2.5 per cent, fractionally ahead of the 2.4 per cent annual reduction rate that is required to meet the UK 2020 target, set out by the Climate Change Act.

However, the 24 FTSE 100 companies in the energy, utilities and materials sectors account for 87 per cent of the top 100 firms' carbon emissions and, crucially, that have adopted an average annual emission reduction rate of just 1.2 per cent.

The report warns that the targets announced by the most carbon-intensive blue chip firms fall "far short of national targets and if we continue on this trajectory, we will not deliver in line with government requirements for 2020, until 2030".

"It is crucial that those sectors responsible for nearly 90 per cent of FTSE 100 reported emissions set aggressive reduction targets," said Paul Dickinson, chief executive of CDP said. "Although we see some individual companies setting strong targets, the sector average reduction targets for Materials, Energy and Utilities sectors are lagging behind what is required to meet UK government targets."

The report also found that a sizeable minority of the UK's largest firms are still yet to announce emission reduction targets. Only 77 per cent of FTSE 100 firms currently have an emissions target in place and, of these, 31 per cent are targets based on carbon intensity rather than absolute cuts in emissions.

A spokeswoman for the Department of Energy and Climate Change sought to downplay the significance of the report's findings, insisting that the UK remained on track to deliver against its carbon budgets.

"The Government's targets on emissions reduction will be met and we have set out in the Low Carbon Transition Plan how they will be met," she said. "The majority of the reductions in the industrial sector (including FTSE 100 companies) comes from the EU Emissions Trading System which has an absolute cap on emissions which guarantees delivery of emissions reduction."

She added that the Carbon Reduction Commitment Energy Efficiency scheme, which comes into effect in April and incentivises around 5,000 firms to curb their energy use, will further drive energy efficiency improvements and CO2 reductions for large businesses.

The CDP's latest findings echoed a similar study from the organisation last year which assessed emission reduction targets from the world's largest firms and found that they were also falling well short of the scale of cuts recommended by the UN's Intergovernmental Panel on Climate Change.

The study found that the Global 100 are on track to deliver average annual cuts in emissions of 1.9 per cent a year, well short of the 3.9 per cent that will be required to ensure emissions in industrialised nations are reduced by the 80 per cent by 2050 that climate scientists believe will limit the risk of dangerous levels of climate change.

It predicted that, based on the current emissions targets adopted by the world's multinationals, they will not deliver an 80 per cent cut in their carbon emissions until 2089, almost 40 years later than climate scientists believe is required.