Update from investor-backed campaign calls on companies to better account for their indirect emissions in corporate climate goals
Net zero pledges may have snowballed across the private sector over the past year, but the world's most polluting companies need to significantly strenghten their decarbonisation efforts to deliver the emissions reductions required to meet global climate goals.
That is the top line conclusion of a major report published this morning by the investor-backed Climate Action 100+ group, which reveals that while nearly half the world's most carbon-intensive companies have now pledged to deliver net zero emissions by 2050 at the latest, the majority of firms choose to exclude a major portion of their greenhouse gas emissions from their carbon calculations.
The update reveals that while 43 per cent of firms surveyed have some form of net zero pledge in place, just one in 10 companies include the most material emissions produced by their supply chains and the end use of their products by customers from their climate goals. These emissions are otherwise known as Scope 3 or value chain emissions, and frequently comprise more than 90 per cent of corporates' carbon footprint.
It also warns that just 26 per cent of utility companies have coal phase out plans in line with the Paris Agreement's goals, and that nearly 200 new oil and gas projects that were green lit this year will undermine global efforts to ensure greenhouse gas emissions fall rapidly throughout the 2020s and beyond.
Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change (IIGCC), one of the five major investor networks behind Climate Action 100, said investor pressure had played a major role in spurring the flurry of net zero commitments chalked up by corporates over the past 12 months, a trend she predicted would accelerate over the coming year in the run up to the COP26 Climate Summit in Glasgow.
"Work will also continue to support those companies that substantiate net zero goals with robust business strategies," she added. "Long-term ambition needs to be made real with clear short- and medium-term targets, and capex alignment to support delivery of those goals."
The growth of Climate Action 100+ initiative over the past year is testament to growing investor appetite for corporate decarbonisation strategies, with the global campaign now endorsed by more than 545 investor signatories responsible for more than $52tr of assets under management.
"Investors are increasingly focused on assessing how well companies are positioned for both climate change and the net zero transition, by identifying which companies will be on the right and wrong side of climate history," former governor of the Bank of England and current UN special envoy for climate action and finance Mark Carney noted in the report's introduction.
"Climate Action 100+ has been leading this charge, providing the momentum, stewardship and analysis to support the world's highest-emitting companies in the strategic resets they need to make. Companies are clearly taking note."
'Leading by example': Green economy welcomes stretching target to slash UK emissions 78 per cent by 2035
But big questions remain over how the UK will meet hugely ambitious new targets, after government signalled it will not sign off on all the CCC's policy recommendations
Tech giant pledges to deliver carbon neutral operations by 2025 and a net zero emission value chain by 2040
British fashion brand launches ‘made to last’ sustainability manifesto geared at transforming into a fully regenerative and circular business model by 2030
Netflix, Deloitte, Boston Consulting Group, and Salesforce also among founding members of Sustainable Aviation Buyers Alliance (SABA)