Some of the world’s biggest listed companies have made minimal progress towards limiting global warming to 1.5 degrees Celsius by 2050 since the Paris Agreement was signed in 2015, and some have even gone backwards, new data show.
The UN’s Intergovernmental Panel on Climate Change released a report this week that said that it was essential to limit global temperature rise to 1.5 degrees and that breaching that threshold will deliver irreversible damage to the planet.
Analysis by ESG Book used forward-looking temperature scores to compare the corporate sustainability and emissions data of the biggest listed companies in the financial indices of the world’s six richest economies. ESG Book is owned by data research and asset manager Arabesque.
It found that the UK’s FTSE 100 has seen no progress since 2015. Just over a fifth of companies (21%) in the index are still aligned to a 1.5 degree trajectory, while 47% of companies are aligned to 2 degrees of warming.
German and Indian companies have gone backwards. In Germany’s DAX 40, 28% of companies are tracking to 1.5 degrees and 24% of companies in India’s BSE 30, compared with 29% and 25%, respectively, in 2015.
The figures underscore an alarming lack of progress towards averting global warming. The world is forecast to hit the 1.5 degree threshold in 20 years, according to the IPCC report.
“With emissions needing to be reduced by 45% by 2030, we’re falling short of the drastic action needed to build a sustainable world economy,” said Daniel Klier, president of Arabesque.
Some improvement
Transparency is improving, and the proportion of companies disclosing at least direct Scope 1 and 2 emissions is increasing in most major indices, which is providing a better understanding of global emissions.
More companies are also reducing their climate impact and all indices have moved to 2 degree pathways from dangerously high levels of 2.7 to 3 degrees in 2015, the research shows.
Some economies are showing small signs of improvement. In the US, 22% of companies in the S&P 500 are now aligned with a 1.5 degree trajectory compared with 14% in 2015, and the proportion of firms aligned to 2 degrees has doubled to 31%.
In Japan’s Nikkei 225, 30% of companies and 4% of China’s SSE 50 are now tracking to 1.5 degrees, up from 24% and zero, respectively, in 2015.
The proportion of companies that are failing to disclose is also falling. Although 44% of China’s SSE 50, 18% of the S&P 500 and 30% of Japan’s Nikkei are still not disclosing, that has dropped to 4% in the FTSE 100 and 11% in the DAX 40.
India’s BSE 30 has seen a rise in non-disclosure to 35% from 25% in 2015.