Research by the Transition Pathway Initiative finds that only 16 of 111 (14 per cent) large publicly-listed industrial companies are aligned with an emissions reduction pathway that would keep global warming at 2°C or below. The combined market cap of the 95 industrial companies failing to align with 2°C or below by 2050 is over US$856bn.
The research analysed 169 companies in total. Of these 111 firms are analysed on carbon performance to show if their emissions reductions plans align with the Paris Agreement. This required benchmarking of companies’ emissions pathways against both the ambitions of and pledges to the 2015 UN Paris Agreement. From a 2030 point of view, 22 per cent of companies aligned with 2°C or below for that shorter time frame including four cement companies.
The report concludes that more industrial companies need to set longer term targets to 2050 that require greater levels of decarbonisation. It also suggests that the circular economy can help address the challenges of the 'hard to decarbonise’'sectors by using new processes to design out waste and pollution and recycle more products and materials. For example, in cement production emissions-intensive clinker could be replaced by steel blastfurnace slag and coal ash. It is estimated 15-25 per cent of clinker in Europe could be replaced in this way.
Euan Stirling, global head of stewardship and ESG Investment, Aberdeen Standard Investments, added: "Sustainability of global development will be determined by how we produce and use commodities such as steel and cement. That is why the TPI report covering industrial and materials companies is both essential reading and a call to action for investors. Only six of the expanded coverage of 169 companies have achieved TPI’s top grade with many failing to make any progress since the last publication. We hope that we will be joined by others in redoubling our stewardship efforts with these companies to help them improve their performance."
