ALMOST half of the worst-offending companies for carbon emissions are failing to consider climate change in their business decisions, new church-led research suggests.
The research, published last week, was presented in the second report from the Transition Pathway Initiative (TPI), in partnership with the UK Environment Agency Pension Fund, and the LSE. The TPI is an online data-analysis tool created by the national investment bodies of the Church of England — the Church Commissioners, the CBF, and the Pensions Board — for investors to assess how effectively companies are addressing climate change (News, 13 January 2017).
Out of 274 high-carbon-emitting companies assessed by TPI — an £11-trillion network — 46 per cent did not adequately consider climate risk in operational decision-making. One quarter (25 per cent) did not report their own emissions at all.
Of the 160 companies assessed specifically for their current and planned greenhouse-gas emissions, only 20 companies (one in eight; 12.5 per cent) reported reducing carbon emissions at the rate required to keep global warming below 2°C, described as the “most ambitious” benchmark.
The co-chair of TPI and director of ethics and engagement for the C of E Pensions Board, Adam Matthews, urged more investors “to engage with big emitters across all sectors” to ensure that companies were setting emissions targets consistent with the Paris climate agreement of not more than 2°C.
“Engagement is starting to show results, but not at the pace needed,” he said. “A failure to grasp the seriousness of the warning from this TPI report, and to recognise the slow pace of corporate progress, will directly undermine our ability as pension funds to manage the financial risks within our portfolio for our beneficiaries.
“The clock is ticking on irreversible climate change. . . Investors need to adopt an emergency footing, otherwise the window to secure the change we need will be gone.”
The research, conducted by the Grantham Research Institute on Climate Change and the Environment at the LSE, uses FTSE Russell data to analyse companies in 14 “carbon-intensive” sectors, including oil and gas, electric utilities, automobiles, airlines, and steel. These sectors account for 41 per cent of global emissions from publicly listed companies worldwide.
The majority (84 per cent) of all companies analysed did not disclose an internal carbon price, while 86 per cent had “yet to undertake and disclose climate scenario planning”.
The co-director of the Grantham institute and lead author of the report, Professor Simon Dietz, agreed with Mr Matthews that the corporate sector was improving its climate planning and performance, “but not fast enough. Cutting through the noise we can see that barely 12 per cent of companies plan to reduce emissions at the rate required to keep global warming below 2°C.”