10 Sep Corporate climate target push, but credibility concerns continue
A new study has shown that over 30% of the highest emitting public companies have established long-term climate targets aligned with the Paris Agreement. Still, many others need to deliver clear delivery measures. The research from the TPI Centre, part of the London School of Economics and Political Science, discovered that 30% of the largest businesses have credible climate plans, representing only a 7% increase since 2020. Collectively, these businesses are valued at nearly $39 trillion.
The TPI Centre explored the Carbon Performance Assessment of over 400 businesses and the Management Quality progress of 1,000 of the highest-emitting public companies worldwide. The research indicated that most firms recognised climate change as a prominent business risk and an opportunity, and had introduced policies and emission reduction targets by the Paris Agreement. The research found that disclosure often focused on Scope 1 and 2 emissions and that few companies had created a clear transition plan aligning their business processes with decarbonisation goals.
David Russell, the chair of the Transition Pathway Initiative explained that the study showed that many businesses within high-emitting industries are failing to deliver credible transition plans and targets. Russell highlights that investors must prioritise their efforts to work with organisations and policymakers to support the necessary responses to the risk associated with climate change.
The research showed that the creation of net zero targets differed by industry. Nearly 50% of the mining industry is aligned with net zero, while food producers and oil and gas businesses are the industries least aligned with the transition (under 10% for both). The research was released at a similar time when several FTSE 100 companies were questioned about their decarbonisation strategies as part of the Climate Pledge. Several businesses have been highlighted as failing to commit to the pledge’s requirements, with their long-term climate targets not being verified by the Science-Based Targets Initiative (SBTi) within the 24 required timeframe.
Previously, the SBTi would allow business names to be removed from its platform if targets weren’t verified. A new compliance process now means businesses are highlighted as ‘commitment removed’. Over 200 companies have been allocated with this label, mostly those experiencing challenges aligning with SBTi’s Net-Zero Standard for businesses, which requires companies to commit to achieving net zero by 2040 at the latest.
Recent research from Net Zero Tracker confirmed that over 1,000 businesses within the Forbes Global 2000 have created a net-zero target. Similar to the findings from the TPI Centre, the research discovered that the integrity of these targets is inadequate. Furthermore, only 4% of businesses with net-zero targets would meet the requirements in the revised Starting Line Criteria, released in the UN Race to Zero Campaign.
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