What role are global companies taking in efforts to tackle climate change?

With just 100 companies responsible for 71% of industrial greenhouse gas emissions and trillions of dollars of investment needed for the transition to a low-carbon economy, the cooperation of the private sector will be vital for meeting the 1.5-2 degree targets under the Paris Agreement.

Companies and investors have been showing their support for reducing emissions and meeting the commitments of the Paris Agreement. More than 600 companies, represented a market cap of $15.7 trillion, have made voluntary commitments on climate action through the We Mean Business coalition. In response to President Trump’s announcement that the US would be withdrawing from the Paris Agreement, more than 1700 American businesses signed up to the ‘We Are Still In’ coalition, alongside more than 200 cities. It’s not just their reputation at stake: Reducing their carbon footprint could save money and confer a competitive advantage.

Investors are also getting involved through initiatives like the Portfolio Decarbonisation Coalition and the Institutional Investors Group on Climate Change, which represents €21 Trillion in assets. Investors are increasingly demanding more information about the climate risks facing the companies they invest in. Like the non-financial corporations, this is not purely altruistic – evidence suggests that taking ESG factors into account can also be a good investment decision.

While these are encouraging signs, voluntary pledges of support will not be enough. Analysis of emissions-intensive sectors suggests considerable variation the extent to which companies are including climate change in their strategic decisions. Key sectors like aviation and shipping are excluded from international emissions targets, even though international shipping alone would have been the sixth largest emitter of GHG emissions globally in 2015 if treated as a country.

But more support from investors and individual companies could be a good start.