Investors With $54 Trillion Say Net Zero Requires Drastic Action

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For all the talk of reaching net-zero emissions, the world’s largest polluters are a long way from achieving that goal.

That’s the findings of an analysis of companies’ climate ambitions and progress towards net zero from Climate Action 100+, an investor group that seeks to pressure the largest carbon emitters to cut their greenhouse-gas emissions. The investors found that none of the 159 companies they studied has fully disclosed how they will eliminate their net emissions. And while 83 of them have said they plan to reach net zero by 2050, only half of those commitments include emissions generated by customers using their products.

“There’s an urgent need for greater corporate action and higher ambition in accelerating the net-zero economy and ensuring a safe and viable future,” said Mindy Lubber, chief executive officer of sustainable investment nonprofit Ceres and a member of Climate Action 100+ steering committee, in a statement. “The world’s largest corporate emitters have an opportunity to act quickly to distinguish themselves from their peers, and move forward with plans to become net-zero businesses.”

Companies in all sectors are being pressed by investors, governments and the general public to cut emissions and retool their operations for a low-carbon world, and nowhere is this pressure greater than for fossil-fuel companies. That’s because they account for the lion’s share of emissions -- the companies targeted by Climate Action are responsible for more than 80% of global industrial greenhouse-gas emissions -- and because scientists have said emissions will need to drop by about 50% by 2030 and reach net zero by the middle of the century to avoid the most catastrophic impacts of climate change.

The Climate Action 100+ Net-Zero Company Benchmark revealed that only six companies, including RWE AG, Total SE and Repsol SA, have explicitly committed to align their future capital expenditures with their long-term emissions reduction targets. In addition, while climate change issues are overseen by the board at 139 of the focus companies, only a third of companies tie executive remuneration directly to the firm’s emission-reduction targets.

Climate Action 100+ was formed in 2017 and now has more than 575 members that manage a combined $54 trillion of assets. The initiative engages with 167 companies, which include the likes of BP Plc and Exxon Mobil Corp., to improve governance, curb emissions and strengthen climate-related financial disclosures. The net-zero benchmark covers 159 of the companies.

For Lucie Pinson, director and founder of environmental nonprofit Reclaim Finance, it’s not only corporate emitters who are moving slowly to address climate risks. Some investors are dragging their feet, she said.

“Investors need to drastically up their engagement game,” Pinson said. “If investors don’t want to do what needs to be done for the climate, let’s hope they now decide to act out of self-protection from future stranded assets.”

©2021 Bloomberg L.P.

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