Climate transition plans inadequate for vast majority of companies

Just 1% of the world’s largest publicly-listed companies are aligning future capital expenditure with long-term decarbonisation goals, new research has found.

The analysis of over 1,000 public companies also found that only 2% clarify the role that offsets and negative emissions technologies will play in their transition plans.

Furthermore, just 5% quantify their emission reduction strategies, and only 2% have committed to phasing out capital spending in carbon-intensive assets or products.

On a more positive note, the findings from the Transition Pathway Initiative Centre (TPI Centre) show that 84% of the firms studied were disclosing emissions targets, with 92% reporting scope 1 and 2 emissions.

“These results show that, while companies’ management and governance of climate change have in many ways improved, they have yet to come up with the detailed, quantified and costed transition plans needed in this critical decade,” said Simon Dietz, TPI Centre’s research director.

Firms headquartered in Australasia, Europe and Japan scored relatively higher on average during the analysis.

This comes after separate research from Net Zero Tracker this week revealed that half of the world’s largest companies in the Forbes Global 2000 now have a net-zero target, rising to 94% of UK-based firms in the index.

The total number of net-zero targets has risen by more than 40% in 16 months globally, with 66% of the annual revenue of the world’s largest 2,000 companies now covered by a target.

However, the research also reveals that one-third of firms have still not set any form of emissions reduction target.

John Lang, project lead at Net Zero Tracker, said that a “clear line in the sand on net zero has surfaced”, adding: “Countless net-zero targets are credibility light, but now we can say for certain that most of the world’s largest companies have shifted to the right side of the line on net-zero intent.

“With credible net zero target-setting a proxy for forward-thinking, future-proofing companies, it begs a simple question: are the firms we’re investing in, working for and buying from on the right or wrong side of the line?”

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