Analysis by non-profit disclosure platform CDP and global management consultancy Oliver Wyman has shown companies in the Group of Seven (G7) economies are falling short of meeting their Paris Climate Agreement objectives, based on current corporate pledges to cut emissions.
Under the terms of the global 2015 Paris Agreement, countries had agreed to cut greenhouse gas emissions fast enough to limit global warming to 2 degrees Celsius (°C) and aim to keep the rise below 1.5 °C, which scientists say would avert some of its worst effects.
The difference between 1.5 °C and 2 °C, for example, includes a 10x increased likelihood of ice-free arctic summers, a 2.6x increase in the number of people exposed to extreme heat events, and twice the impact on marine fisheries and crop yields, according to the IPCC.
“The most important driver of rapid emissions reductions in line with the Paris Agreement is ambitious target setting,” said CDP Global Director Capital Markets Laurent Babikian. “It is not acceptable for any country, let alone the world’s most advanced economies, to have industries displaying so little collective ambition. Armed with this information, governments, regulators, investors, and the public must demand more from high-impact companies without climate targets.
“Momentum is growing, but as we approach COP27, we must get our 1.5 °C goals off life support. High-impact companies, and their investors and lenders, must immediately set and honour targets with credible transition plans to allow us to meet this goal.”
The report listed companies in Germany and Italy as having the most ambitious targets to reduce emissions in the G7 to limit global warming to 2.2 °C. They were followed by France at 2.3 °C and the United Kingdom at 2.6 °C. The United States aimed at 2.8 °C and Canadian companies fared the worst with targets aligned with 3.1 °C of warming on average.
James Davis, Partner, Financial Services at Oliver Wyman added: “The analysis highlights big differences in ambition and willingness across companies to take a lead with their targets, and the urgent need to spread best practices further and faster if we are to have a chance of reducing emissions to achieve 1.5 °C – a goal whose importance has only been underscored by recent extreme weather. Supportive government policy is crucial, as well as resolving the structural challenges in some sectors and regions.
“As the financial system commits to net-zero and seeks to steer capital towards those pioneering the low carbon economy, there will be growing scrutiny on corporate emissions, targets and transition plans, underpinned by the move towards mandatory disclosures in many key jurisdictions.”
Nearly 200 countries will convene at the COP27 climate summit in Egypt next November, after what has been for many a devastating summer of drought, heatwaves, and other climate-linked extreme weather.
