51% of major global energy companies are still failing to disclose their decarbonisation strategy
New research from the Transition Pathway Initiative Global Climate Transition Centre (TPI Centre) shows that 51% of the world’s biggest publicly listed energy companies are failing to disclose a decarbonisation strategy that sets out how they intend to meet their long and medium-term targets for reducing greenhouse gas emissions.
The Centre’s research also finds that 89% of these energy companies do not disclose how they are working to decarbonise their capital expenditures.
Simon Dietz, Professor of Environmental Policy at the Grantham Research Institute on Climate Change and the Environment and Research Lead for TPI, will detail tonight (18 October) at the London School of Economics and Political Science (LSE) launch of the TPI Global Climate Transition Centre how “many big energy corporations still do not have credible net zero targets.”
The TPI Centre analyses big corporations’ management and governance of their carbon emissions, as well as their carbon emissions pathways. Looking back over the last four years, the Centre’s research shows how progress has been made both on disclosing emissions and setting targets, but that progress is slow and the credibility of many companies’ plans remains unclear. Faster progress and more credible disclosures of companies’ transition plans is a key priority for investors going forward.
Looking at how companies’ emissions pathways would align with international climate goals, the Centre’s latest research suggests that only 19% of the world’s 132 biggest, publicly listed energy companies would align with 1.5C in 2050, and only 14% would do so in 2035. While a further 32% of companies would align with a below 2C target in 2050, there is still much room for improvement.
TPI is an initiative led by Asset Owners that is supported by 131 asset owners, asset managers and service providers representing more than $50 trillion in combined assets under management and advice. The TPI Centre has been established at the LSE with support from Climate Arc, TPI Ltd., FTSE Russell and the London Stock Exchange Group (LSEG) Foundation. Some of the Centre’s data are provided as part of the Climate Action 100+ Net Zero Company Benchmark.
The Centre supports investors to understand the risks and opportunities posed by the low carbon transition. Through the provision of independent, academically rigorous, open-access data, it is intended that the Centre will be a key part of the financial architecture to support investment decision making through increased transparency and accountability of company transition plans.
The Centre already tracks over 600 of the world’s largest high-emitting companies covering sectors such as steel, aviation and shipping amongst others as well as the banking sector. Over the coming years the Centre plans to increase its coverage to multiple-thousands of companies as well as assess government and corporate debt.
Simon Dietz, Professor of Environmental Policy, Grantham Research Institute on Climate Change and the Environment, said:
“Our research underlines the importance of companies walking their net zero talk. At present, many big energy corporations still do not have credible net zero targets.”
“In the last few years we have seen a commendable spread of corporate net zero goals, but in many cases these mid-century goals are yet to be backed up by climate-compatible goals in the short and medium term, or details about how companies plan to meet their targets, for example what the implications are for their capital spending.”
Adam Matthews, Chair of TPI & Chief Responsible Investment Officer for Church of England Pensions Board, said:
“Is the transition glass half full or half empty? Unquestionably, companies are transitioning and ambitious targets are being set and not just in the long term but also over the short and medium. However, with over half the energy sector still to set meaningful targets and the vast majority yet to demonstrate alignment of their capital expenditure the challenge for investors remains considerable.”
“The opening of the TPI Centre today at LSE is a critical part of the international financial architecture to drive transparency and accountability to support better investment decision making addressing the risks and opportunities posed by the low carbon transition.”
Notes to editors
- The Grantham Research Institute on Climate Change and the Environment was established in 2008 at the London School of Economics and Political Science. The Institute brings together international expertise on economics, as well as finance, geography, the environment, international development and political economy to establish a world-leading centre for policy- relevant research, teaching and training in climate change and the environment. It has an active body of work on sustainable finance, including carbon assessment, central banks, the just transition, resilience and sovereign bonds. It is funded by the Grantham Foundation for the Protection of the Environment, which also funds the Grantham Institute – Climate Change and Environment at Imperial College London.www.lse.ac.uk/grantham/
- The Grantham Research Institute on Climate Change and the Environment, based at LSE, is the TPI’s academic partner, developing the methodology behind the tool and hosting it online.
- The TPI Centre is one of the leading organisations empowering investors to understand and drive the low-carbon transition by providing independent, open-access data showing whether the world’s largest high-emitting companies are adapting their strategies to align with international climate goals.