Landmark “State of Transition” research assessed that 274 high emitting companies backed by the $14 million Transition Pathway Initiative have not met the initiative’s climate goals, putting investors into a state of “emergency footing”.
According to the research:
- 46% of companies are failing to properly integrate climate change into their business decisions
- Only 1 in 8 companies or 12.5% are effectively reducing carbon emissions at the rate required to keep global warming below 2 degrees Celcius including Iberdrola, E.ON, Stora Enso and Edison International
- A $14 trillion network urges investors to adopt an “emergency footing” plan to encourage companies to move faster on climate and essentially avoid a “Catch 22 on disclosure”
- The report notes that about 27% (one in four) companies that were assessed for a second year are however improving on climate management
Figure 2.5: TPI State of Transition Report 2019
A report done by the Transition Pathway Initiative assessed the climate performance of 274 of the world’s highest emitting, publicly listed companies. It was found that almost half of these companies do not actively consider climate risk in their operational decision making while a quarter of them do not report their emissions at all. These actions completely undermine key recommendations made by the Task Force on Climate-Related Financial Disclosures or the TCFD.
46% of companies are failing to properly integrate climate change into their business decisions
The report focuses on several aspects of the initiative such as “Trends in Management Quality” related to climate, “Carbon Performance” in terms of current and planned GHG emissions and many others. A total of 160 companies were analyzed on Carbon Performance and the research found that only 20 companies are aligned with a plan that would keep global warming below 2 degrees Celcius.
Adams Matthews, the Co-Chair of TPI and Director of Ethics and Engagement at Church of England Pensions Board states:
“TPI’s research shows that we need many more investors to engage with big-emitters across all sectors of the economy to ensure companies are setting emissions targets [that are] consistent with the goals of the Paris Climate Agreement. Engagement is starting to show results but not at the pace needed.”
“The clock is ticking on irreversible climate change… the window to secure the change we need will be gone.”
Figure 2.6: TPI State of Transition Report 2019
The study uses FTSE Russell data to analyze leading companies in 14 carbon-intensive sectors such as Oil and Gas, Electric Utilities, Automobiles, Airlines, and Steel. These sectors account for 41% of global emissions from publicly listed companies worldwide. The Initiative is backed by $14 trillion worth of assets, including pension funds and asset managers.
The goal is that in the year ahead, these high-emitting companies will continue their efforts to reduce their carbon footprint and integrate climate change into their operations and business strategies. TPI’s research and findings provide these companies with an outline for which they should sharpen their engagement efforts in regards to climate change.
Just like these large companies, it is important to integrate efforts that fight climate change into our own daily operations. Let’s continue with the fight towards a greener planet!