Corporate Action Paves Path for Nearly 2.9 Degrees of Warming by 2100

Corporate Action Paves Path for 2.9 Degrees of Warming by 2100

The lastest update to the MCSI Net-Zero Tracker, a quarterly analysis of public companies’ climate action and progress, shows a climate impact trajectory that aligns with a global temperature rise of 2.9 degrees C despite corporate promises.

“A planet that is 2.9 degrees warmer by 2100 is not just a more volatile world, it is a dislocated world,” Sylvain Vanston, MSCI’s executive director of climate change investment research, told Axios. “Disorderly transition scenarios are a euphemism for chaos.”

The MSCI index uses current and projected emissions data based on current policies to predict a company’s climate impact. Unsurprisingly, fossil fuel companies like BP, Chevron, and ExxonMobil are among the world’s top offenders. Only 46% are on track to limit warming to 2 degrees, while a mere 11% are on track to the 1.5-degree limit scientists say is essential to preventing runaway climate change.

The Economist: See what three degrees of global warming looks like, October 30, 2021.

MSCI: MSCI Net-Zero Now (documentary), October 11, 2022.

Bertelsmann Foundation: A Global Security Threat | Climate Change, February 28, 2022.

Why This Matters

Corporate greenwashing is not uncommon. In fact, it’s nearly everywhere. More companies may be making net-zero pledges, but often, the initiatives are not ambitious enough and rely on carbon offsets rather than direct emissions cuts. Recent reports have found a major gap in disclosure, too: the world’s biggest banks have funneled $4.6 trillion into fossil fuel projects over the past six years, while just 1% of companies disclose all of the information needed to determine climate commitment progress.

The Economist: How do carbon markets work?, October 1, 2021.

FT: Carbon capture | The hopes, challenges and controversies, April 6, 2022.

DW: Why carbon offsets are worse than you think, January 21, 2022.

Reuters: World could see 1.5C of warming in next five years, May 10, 2022.

NextEra Energy

The purchase of carbon offsets may sound appealing to many companies, but offsets' actual, real-world efficacy is uncertain. For this reason, US-based energy company NextEra is pursuing a commitment to Real Zero, meaning their plan to decarbonize by 2045 relies on solar and hydrogen and will not utilize any offsets. Only time will tell, but NextEra’s plan could provide a roadmap for other energy companies to also move beyond offsets.

MSCI says that companies must pursue an 8-10% annual emissions cut immediately if the world hopes to remain under the 1.5-degree limit. They also recommend that the SEC require climate disclosures for investors. As Vanston put it: “what gets measured gets managed.”

TED: Green Hydrogen | A Galway Solution to a Global Crisis | Rory Monaghan, November 24, 2021.

SEC: The SEC & Climate Risk Disclosure | Office Hours with Gary Gensler, July 28, 2021.