75% of Global Companies Failing to Meet Paris Agreement Goals
Though many companies have publicly announced their commitments to achieving net-zero emissions, new research paints a more sobering picture -- less than a quarter of the world's large public companies are on track to meet the goals of the Paris agreement by 2050.
In fact, emissions have continued to rise since 2015, according to data from sustainable finance firm Arabesque, and there was a decrease in global Paris alignment last year.
Georg Kell, Arabesque's chairman, said the research confirms that the measures taken by most companies "have made a difference here and there, but they don't add up to systemic change."
Why This Matters
Most companies that are abiding by Paris Agreement goals were European -- Arabesque's research found that flagship indexes in Sweden, Germany, Switzerland, Finland and Japan have the largest number of listed companies on course to meet the 1.5 degrees Celsius target by 2050. The figure is lower for London's FTSE 100 and the US S&P 100, and drops even further for Hong Kong's Hang Seng Index and Australia's ASX 50.
Arabesque emphasizes that the companies that comprise this 25% did so with relatively little government intervention, which according to Kell, is "not a small thing."
Even so, this number has to improve in order for the world to avert climate catastrophe, and Arabesque argues that the US government should create more incentives and restrictions that encourage companies to do better.
Taking Effective Climate Action
The study covered emissions generated directly and indirectly by companies, known as scope 1 and scope 2 emissions, but did not cover emissions from the products they sell, known as scope 3, due to difficulties obtaining this data.
The firm also found that 15% of companies -- with a combined market value of $5 trillion -- have not disclosed their carbon emissions in the 2015-2019 period. While that's slightly better than figures from 2014, it "has yet to translate into corporate climate action at scale," Rebecca Thomas, one of the leaders of the research, told CNN Business.
President Biden's Leaders Summit on Climate was an important catalyst for world leaders to consider taking stronger climate action, particularly in terms of economics. While governments around the world have included environmental projects in their coronavirus recovery plans, the International Energy Agency warned earlier this week of a surge in global carbon dioxide emissions as economies bounce back from the pandemic. Arabesque suggests that taxing companies for carbon pollution would be the most effective way for countries to reduce emissions.
"The imperative to decarbonize is increasingly urgent and it will be forced upon corporations ready or not," Kell said, adding "those that think ahead and anticipate a higher carbon price in the future will clearly be much better positioned."
Copyright © 2021 Our Daily Planet. Reprinted here with permission. This version may have been edited from the original article published on April 22, 2021.