Update: 22 November 2018
A full public access version of this article is now available here
The Transition Pathway Initiative (TPI) has today published a synthesis of the state of climate action by high-carbon global corporations in the leading climate change journal Nature Climate Change (http://dx.doi.org/10.1038/s41558-018-0343-2).
The article assesses the patterns of corporate carbon management and emissions performance across the 138 companies that were in the TPI database as of June 2018. It also looks at how corporate carbon management and emissions performance correlate with key features of those 138 companies such as their size, region of headquartering and sector.
Looking across a range of carbon management practices, it is clear that overall progress on corporate management of carbon emissions is mixed. While a majority of companies has taken initial steps, including publishing a policy to act, disclosing operational and some value-chain emissions, and setting some form of energy/emissions target, only a minority has taken the more advanced steps, such as setting long-term emissions targets, or assigning boardroom responsibility for climate change.
There are some interesting findings in the details of the data:
- Automobile manufacturers and electricity utilities implement the most carbon management practices, while coal-mining companies and steel makers implement the fewest.
- Companies with a large market cap implement more carbon management practices than medium and small companies.
- Companies headquartered in Western Europe and to a lesser extent the Industrialised Asia-Pacific region do more than companies headquartered in emerging markets and in North America.
- Region and size appear to matter more than sector.
The paper also looks at corporate carbon emissions performance. Two results stand out. First, there is limited robust, comparable information on current or future emissions. Twenty eight per cent of companies considered do not disclose their historical emissions and activity/production in a comparable form. Secondly, where companies do provide information on their targets, a large share of company targets are aligned with the Paris Agreement NDCs and with the overall objective of the Paris Agreement to limit global warming to 2°C. Companies headquartered in Western Europe have more ambitious targets on average.
While there appears to be no relationship between companies’ current carbon management quality and their current emissions performance, companies that have implemented more carbon management practices today are more likely to have set 2°C-aligned targets. That is, good carbon management today may be tied to better emissions performance in the future. This implies that investors should focus on getting companies to set long-term corporate targets, and should ensure that companies have robust carbon management practices to ensure that these targets are delivered.
The Transition Pathway Initiative (TPI) is a global initiative led by asset owners and supported by asset managers who collectively account for over £8.2 trillion (US$10.7 trillion) of assets under management. TPI assesses the progress being made by companies on the transition to a low-carbon economy in key sectors such as automotive, electricity and steel.
TPI is supported by: Aberdeen Standard Investments; Aviva Investors; BNP Paribas Asset Management; Brunel Pension Partnership; CalPERS; CCLA; Central Finance Board of the Methodist Church; The Church Commissioners for England; Church of England Pensions Board; The Church in Wales; Electron Capital Partners; Environment Agency Pension Fund; AP Fonden; Generation; GMPF; Hermes investment management; Legal & General investment management; Local Authority pension Fund Forum; LPP; Northern Pool; OP Trust; PGGM; Representative church body of the Church of Ireland; RPMI Railpen; Robeco; Ruffer; Schroders; AP3; UBS; Union investment; USS; Wellington Investment Management; Wespath; West Midlands Pension Fund.