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Two-thirds of largest energy firms not aligned with Paris Accord, TPI reports

29 November 2021

ALAMY

Flames from a chimney at an Exxon Mobil oil refinery, petrochemical, and power station in Southampton, in October

Flames from a chimney at an Exxon Mobil oil refinery, petrochemical, and power station in Southampton, in October

TWO-THIRDS of the world’s largest energy companies are not currently aligned with the Paris Agreement to limit global warming to well below 2°C by 2050, new figures from the Church of England’s Transition Pathway Initiative (TPI) suggest.

Only one in ten of the 140 companies assessed by the TPI in its latest report, published on Friday, are on target to reach 1.5°C in the next 30 years. One quarter (24 per cent) are on track to reach 2°C, leaving 66 per cent lagging. Of these, 53 per cent were not aligned with any TPI climate benchmark; nine per cent were aligned only with national commitments (that still take global warming over 2°C); and four per cent did not disclose climate data.

The TPI was established in 2017 by a coalition of the C of E’s national investing bodies and other ethically minded funds, to help investors to assess how effectively a firm is addressing the challenges of climate change (News, 13 January 2017).

In its first annual analysis of the transition plans of the world’s largest energy companies to be released since COP26, the TPI found that 14 firms were aligned with its 1.5°C benchmark: Occidental Petroleum; TotalEnergies; Eni; EON; RWE; Ørsted; PSEG; Eversource Energy; EDP; Con Edison; CMS Energy; AES; Meridian Energy; and Enbw Energie.

For the first time, three of the energy companies aligned with the below-1.5°C pathway were oil and gas firms: TotalEnergies, Occidental Petroleum, and Eni. Most (83 per cent), however, are not aligned with the Paris Agreement, including BP, Exxon Mobil, and Saudi Aramco. The latter represents approximately 48 per cent by market cap.

The chair of TPI and Chief Responsible Investment Officer at C of E Pensions Board, Adam Matthews, said: “Some companies, as shown by this latest TPI research, are moving out of first gear and accelerating their transition plans. Concerningly, for investors there remains significant distance between net-zero rhetoric and net-zero reality in the case of most fossil-fuel majors.

“Electric utilities are the fastest-changing sector, with a significant degree of companies setting credible targets aligning to net zero.”

He continued: “Part of the complexity of the transition is there are varied strategic options for companies seeking to achieve net zero. Investors have had to intervene with the support of insights from TPI to set a Net Zero Standard on disclosure in the oil and gas sector and are working to do the same in the mining sector. These Standards will be reflected in future TPI energy assessments.

“Investors need to engage the demand side with the same level of intensity that we do with the fossil-fuel sector. Ultimately, if we reshape demand, we reshape the energy providers.”

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