MSCI: More Public Companies Are Making Climate Commitments But Deadline To Limit Warming To 1.5°C Shrinks Again

  • Nearly half of global public companies have now set a decarbonization target, but only 17% of those targets would align with the 1.5°C temperature rise goal
  • Listed companies’ global emissions budget for limiting temperature rise to 1.5°C will expire by October 2026
  • Analysis of global private companies shows they have lower carbon intensity than their public counterparts

The number of global public companies making climate commitments has steadily grown this year, but these targets vary significantly in their comprehensiveness and ambition, according to the latest MSCI Net-Zero Tracker, a gauge of climate change progress of the public companies within the MSCI All Country World Investable Market Index (ACWI IMI). The Net-Zero Tracker reveals a clear trend among listed companies: more climate commitments, improved disclosures, but ever-growing carbon emissions.

Nearly half (44%) of listed companies have now set decarbonization targets, – which is 8 percentage points more than was reported in the October 2022 MSCI Net-Zero Tracker, – but this does not necessarily mean that they are all adequately addressing their carbon intensity. Only 17% of companies’ climate targets would align carbon emissions across their total value chain with the ambitious 1.5°C goal of the Paris Agreement.

Further showing the range of commitments being made, fewer than a third (30%) of all published targets are aiming to reach net-zero emissions, despite the likelihood of voluntary and mandatory corporate climate disclosure standards coming into effect in the near future.

See related article: MSCI Launches Tool for Companies to Analyze Sustainability Strategy Against Peers

The Net-Zero Tracker, released today by MSCI, a leading provider of critical decision support tools and services for the global investment community, shows that public companies are projected to deplete their share of the global emissions budget for limiting temperature rise to 1.5°C by October 2026, two months sooner than MSCI previously estimated in October 2022.

Public companies are on track to emit 11.2 gigatons of direct Scope 1 greenhouse gas emissions into the atmosphere this year, unchanged from 2022, despite making more carbon reduction commitments. This puts them on a path to warm the planet by 2.7°C this century, according to MSCI’s “Implied Temperature Rise” metric, based upon an analysis of their future emissions pathways and current climate commitments.

For investors trying to assess these companies to make climate-conscious portfolio decisions, there has been an upturn in the level of disclosures, as over a third (35%) of public companies now report Scope 3 emissions that arise from their suppliers or use of their products by customers, up five percentage points from October last year.

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