The world’s most carbon-intensive firms are gradually reducing their emissions, but are providing investors with little insight on their paths to net zero, especially around capital expenditure, according to a Climate Action 100+.
The investor-led initiative’s sixth Net Zero Company Benchmark – which assessed 164 of the world’s most carbon-intensive firms – found that 69% of companies had reduced their absolute Scope 1 and 2 emissions in the past three years. Only 32% of companies had reduced their emissions intensity in line with credible 1.5°C benchmarks for their sector in the past three years.
In terms of reporting, 8% of companies are disclosing credible transition plans for meeting their own medium- and long-term greenhouse gas (GHG) reduction targets, the analysis found. “However, large reporting gaps remain on how companies are allocating capital to the implementation of their decarbonisation plans,” is said.
The majority of companies assessed continue to set medium- (85%) and long-term (80%) GHG reduction targets. However, fewer set short-term targets, with 41% of companies setting a short-term GHG reduction target in 2025, a slight decrease from last year. Six more companies than last year now have short-term targets aligned with credible 1.5°C benchmarks for their sectors.
“Companies need to be clearer on how they choose to allocate capital to decarbonisation, set near-term as well as longer-term targets, and align policy engagement with their climate ambitions,” said Tamsin Ballard, Chief Investor Initiatives Officer, UN Principles for Responsible Investment .
The benchmark’s climate accounting and audit assessment – which tracks whether the material impacts of climate risks and company targets are adequately disclosed to inform investors’ capital allocation and stewardship decisions – showed “little year-on-year change”.
More than 600 investors use to Climate Action 100+ to engage the world’s largest corporate GHG emitters to encourage action on climate change to mitigate financial risk and maximise the long-term value of assets.
