A new report by CDP (formerly the Carbon Disclosure Project) has exposed the inadequacy of current corporate targets in reducing greenhouse gas emissions enough to limit global warming to 1.5 °C. However, the study also highlights a promising increase in the number of science-based targets aligned with the 1.5 °C goal.
CDP recently launched its Corporate Environmental Action Tracker, which consolidates and monitors climate commitments and actions taken by companies to reduce their emissions. The tracker, which is accessible through CDP’s website for free, offers insights derived from the world’s largest corporate environmental data set. It aims to serve as a tool for businesses, investors, policymakers, and other stakeholders to make informed decisions and demonstrate accountability around climate action.
The tracker draws from nearly 10,000 companies that voluntarily disclose climate-related information with CDP. Together, these businesses contribute to approximately 16% of the world’s annual greenhouse gas emissions, and most of the companies in the FTSE100 and S&P 500 are part of this group.
What the tracker found
According to CDP, only 24% of disclosing companies, covering 5% of emissions, are on track to meet their targets. This is despite the number of disclosing companies in all sectors bar aviation and shipping increasing since 2019.
CDP’s founder and chair Paul Dickinson said: “The tracker shows only 24% of disclosing companies, covering 5% of emissions, are on track to meet their targets. Despite the innovation displayed by the leaders, action overall is not at the level we need, and with time running out to transform our global economy, we are placing our Tracker into the hands of the world’s climate data users.
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“I hope that this increased transparency is a clear signal of CDP’s commitment to enabling the transformative action we must see to have any hope of limiting warming to 1.5C”.
Moreover, although around 60% of companies have set emissions reduction targets, less than 1% have developed transition plans that are considered credible by the CDP, which believes an effective transition plan should include interim emission targets, financial strategies for achieving decarbonisation, and evaluation of climate-related risks.
Positively, the proportion of global emissions covered by companies with a target including Scope 3 has more than doubled since 2019 to ….. Globally, the proportion of emissions coming from companies that are on track or almost on track to meet their targets has increased from 5% in 2020 to 6% in 2022.
Moving forward
CDP has called on all companies worldwide to disclose their emissions, as it believes comprehensive data is crucial to understanding the distance the global economy needs to cover to achieve the 1.5 °C target and identifying areas that require further action.
Companies should use the tracker to inform environmental reporting and business planning and see how their joint efforts are reducing and could further reduce emissions.
Future iterations of the tracker will integrate CDP’s environmental data on water security and forests. The degradation of nature, including forests, wetlands, and oceans, stands as the second-largest source of emissions after fossil fuel combustion. Therefore, addressing nature-related issues equitably plays a critical role in achieving a 1.5 °C future.
