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Powerful investor group finds net zero pledges distant and hollow

The deluge of corporate climate pledges are yet to translate to meaningful action, as only a handful of the 159 companies responsible for more than 80 per cent of global industrial emissions have set adequate targets, the influential Climate Action 100+ investor group has reported.

The investor group, which is the largest alliance with 575 institutions that collectively manage $54tn in assets, found in its latest benchmark analysis that almost all of the pledges are both distant and hollow.

Less than 1 per cent of the companies analysed had set a short-term greenhouse gas emissions reduction target of 2025, at the latest, that covered the bulk of their emissions — though more than half had promised to achieve net zero emissions by 2050.

Only six companies had committed to aligning their future capital spending with long-term emissions reduction targets.

Only five had committed to aligning all their own political lobbying with the Paris climate agreement that seeks to limit global warming to 1.5C with a red line at 2C. 

The tracking system developed by CA100+ follows a range of metrics related to the three key topics of emissions, governance and disclosures — criteria the group said were key to “robust” net zero-aligned business strategies. Not a single company performed well across all of the indicators.

The companies that fared worst in the CA100+ initial analysis included Warren Buffett’s conglomerate Berkshire Hathaway, in the company of PetroChina, the listed arm of China’s state-owned energy group, and Saic Motor, the state-owned listed carmaker, which were among the 10 groups that failed to meet a single criterion.

The tracker does not rank companies or use overall numeric or alphabetic ratings, but indicates whether they have fully, partially or not at all met specific indicators.

Berkshire Hathaway urged shareholders last week to reject a call for greater climate-related disclosures, saying it did not believe an analysis of its risks was “necessary.”

Among the oil majors, Exxon, Gazprom and Petrobras, each had more than $10bn in 2019 upstream capital expenditure — or a total of $35.5bn in earmarked spending — that was estimated to be inconsistent with the International Energy Agency’s Paris-aligned decarbonisation pathway, the CA100+ analysis shows.

Companies that were serious about greening their operations must outline “short and medium term targets, and clear decarbonisation strategies and related capital expenditures,” said Mindy Lubber, chief executive of Ceres, a US investor group that is a CA100+ steering committee member.

While a handful of companies, including BP and Unilever, had committed to aligning spending with their decarbonisation goals, none had disclosed their methodologies for doing so, nor how they would measure progress.

Only 18 companies, including Eni and Rio Tinto, had committed to ensuring the lobbying by trade associations that they supported were in line with the Paris Agreement.

The CA100+ tracking system was devised with help from a broad range of organisations, including the Transition Pathway Initiative, the Carbon Tracker Initiative and InfluenceMap.

While net zero commitments were “absolutely essential”, Anne Simpson, director for board governance and sustainability at the California Public Employees’ Retirement System, said it was necessary to hold companies accountable to these pledges. “This really is about putting your money where your mouth is. We’ve got to start measuring the money.”

The effectiveness of the CA100+ monitoring would be in demonstrating “the extent to which these net zero commitments are really translating into action”, said Stephanie Maier, global head of sustainable and impact investment at GAM Investments.

It also served to emphasise the need for investors to “engage with firms to help them deliver and meet the expectations of policymakers and society at large”.


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