Proportion of high-emitting corporations with long-term climate goals has increased, yet many lack credibility & detail - new research finds

Almost a third of the world’s highest emitters are now publishing long-term commitments aligned to the 1.5C target of the Paris Agreement, however many still lack intermediate targets and clear quantifications of the key elements of their climate strategies.
Published
September 12, 2024
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Almost a third of corporations now have climate goals aligned to the Paris Agreement

The new “State of Transition Report 2024” reviewed the progress of more than 1,000 of the world’s highest-emitting public companies (which when combined are worth around US$39 trillion). The research found that the share of companies with long-term climate targets – those set for 1.5C in 2050 – has increased to 30%, up from just 7% in 2020, however the researchers caution that credibility concerns are likely to persist, given a lack of detail and clarity around how these are to be achieved. The TPI Centre states that: “the credibility of long-term climate ambitions is often unclear, with many companies lacking intermediate targets and clear quantifications of the key elements of their climate strategies"[i]

The report finds that over half of companies (57%) have “have recognised climate change as a relevant business risk and/or opportunity, developed a policy commitment to act, set some kind of emissions reduction target, and disclosed their Scope 1 and 2 emissions”[ii]. However, no company was found to have created a “detailed, actionable transition plan that aligns practices and expenditure decisions with decarbonisation ambitions”[iii].

Significant variation observed between regions and sectors

The research also found that the implementation of climate targets varies significantly based on sector. Around 50% of the diversified mining industry is now aligned with 1.5C or below 2C, followed by steel (46%) and electricity (41%). The least aligned were found to be food producers (8%) and oil and gas companies (6%).

On a regional basis, European, Australasian and Japanese companies’ climate targets were found to have the highest alignment with 1.5C or below 2C in 2050, at 66%, 64% and 56%, respectively. However, at the opposite end of the scale, 82% of Chinese companies are either not aligned or lack suitable disclosure of relevant information; while for those headquartered in other Asian countries this figure is 70%[iv].

TPI’s Chair, David Russell said:

“TPI’s analysis shows that many companies in high emitting sectors are failing to implement adequate transition processes and targets. It also identifies a clear interdependency between local climate policy and company states of transition. Investors therefore need to redouble their efforts to engage with both companies and policy makers to encourage appropriate and urgent responses to the systemic risk that climate change poses.”[v]

Simon Dietz, TPI Centre Research Director and Professor of Environmental Policy, Department of Geography, LSE, added:

“The regulatory environment in host countries is likely to influence how well companies manage climate-related risks and opportunities. If regional nuances are not addressed, investors may withdraw capital from high-emitting emerging markets and developing countries.”

References

[i] https://www.transitionpathwayinitiative.org/publications/85/show_news_article

[ii] TPI State of Transition: Report finds that 30% of the biggest corporate emitters have long-term (2050) climate targets aligned with 1.5°C - Transition Pathway Initiative

[iii] Ibid

[iv] Ibid

[v] Ibid

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Lauren Foye
Head of Reports

Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”

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