The world’s biggest investors have declared that the world’s biggest polluters need to do more and, more particularly, spend more to reduce their greenhouse gas emissions to live up to public commitments to cut their carbon footprints.
- Climate Action 100+ represents the world’s major investors
- No major corporation has put aside enough capital to meet UN climate goals
- Just 9 per cent of firms have targets to reduce supply chain emissions
The report by investor coalition Climate Action 100+ is the group’s first assessment of company performance on climate change.
Climate Action 100+ is made up of 575 investors who have $US54 trillion in assets under management, including some of the world’s biggest investment houses like BlackRock and State Street.
A total of 159 companies were assessed on nine measures linked to meeting the goals of the Paris Agreement, including whether they were on track to achieve net zero greenhouse gas emissions by 2050 and whether they had allocated enough capital to achieve their goals.
It found that none of firms surveyed had committed enough investment to meet the goals of the United Nations climate change treaty to limit global warming to well below 2 degrees Celsius compared to pre-industrial levels.
Only six companies partially met the capital allocation criteria, including oil giants BP and Total, and consumer goods multinational Unilever.
The report said the finding showed a “huge gap in corporate reporting on climate risk management.”
Just over half of the companies surveyed (83) had publicly announced a net zero carbon emissions goal by 2050, but just 9 per cent had targets to reduce most emissions in their supply chain, known as Scope 3 emissions.
The report found that fewer than one-in-five firms had a clear strategy for decarbonisation.
European companies performed the best in terms of setting net zero targets by 2050, with Australian firms second.
Firms in emerging economies, where economic conditions are challenging, struggled to meet climate targets.
Only three Australian firms have ‘clear’ zero emissions plans
Twelve Australian companies were assessed, including BHP, Rio Tinto, AGL, Woolworths and Qantas.
The report found that, on average, Australian companies satisfied just over one-in-three indicators, although local firms had the best disclosure.
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Only three out of the 12 Australian firms — BHP, Rio Tinto and Santos — had a clear strategy to meet their goals of net zero emissions by 2050.
Despite public commitments by firms, including the big miners, to reduce their pollution levels and help their customers cut their carbon emissions, no Australian companies were judged to be spending enough to meet their targets.
Emma Herd from the Investor Group on Climate Change, which co-ordinates Climate Action 100+ in Australia, said the results were a mixed bag, with not enough firms putting in place measures such as linking executive pay to climate goals.
“What we’re not seeing enough of is the detailed plans and the capital allocation,” Ms Herd told the ABC.
“The ambition is great but the detail to implementation would be better.”
Ms Herd said investors would continue to pressure big polluters, including at annual general meetings, to force change.
“It’s not that surprising that many of these companies, the world’s largest greenhouse gas emitters in the most hard-to-abate industry sectors are not satisfying all these areas of performance,” she said.
“But definitely what investors are saying is we expect you to be able to meet these parameters of performance and we will be engaging with you to look at how you are improving your performance.”
BHP outranked Rio Tinto in terms of climate change performance, but both firms were assessed as not allocating enough money to deliver on their promises.
Last week Rio agreed to endorse shareholder resolutions to set targets for cutting carbon emissions.
Australian Super manages $200 billion in pension funds and is a member of Climate Action.
Australian Super’s environmental, social and governance director Andrew Gray said that Rio Tinto was assessed strongly because of an improvement in its approach to climate change, but he warned that “diversified mining companies will need to continue to develop and refine their approach on a number of key issues.”
Qantas did not meet five of the assessed criteria, including an inadequate decarbonisation strategy and climate policy engagement.
The airline joined the Climate Action coalition in December last year and said it fully recognised the importance of lowering emissions.
“We were one of the first airlines to commit to being carbon neutral by 2050,” Qantas said in a statement.
“We also have one of the largest carbon offsetting programs of any airline.”
Mr Gray said the progress of Qantas on climate change was hampered by the impact of the coronavirus pandemic on global aviation.
Woodside Petroleum was judged not to meet the criteria on its decarbonisation strategy and capital allocation alignment.
The oil and gas producer said it would continue to engage directly with shareholders on its climate-related strategy and disclosures, and with Climate Action.
“LNG suppliers will have to earn their place by being increasingly low carbon and cost competitive,” a Woodside spokesperson said.
“That’s why our aspiration is to be net zero from operations by 2050 or sooner.”
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