Firms’ short-term climate plans not Paris-aligned: TPI

Only a low proportion of the world's highest-emitting companies analysed by the Transition Pathway Initiative (TPI) have 2025 and 2035 climate targets that align with the Paris climate agreement's temperature goals, although longer-term commitments are increasing.

About 30pc of the 409 companies in 11 sectors assessed by TPI — which is based at the London School of Economics — now have climate targets out to the middle of the century that are aligned with limiting global warming to 1.5°C above pre-industrial levels, compared with 7pc in 2020.

And another 14pc have 2050 plans aligned with limiting global warming to below 2°C. The Paris deal seeks to limit the temperature increase to "well below" 2°C above the pre-industrial average and preferably to 1.5°C.

But shorter-term plans for 2025 and 2035 remain largely unaligned with the temperature goals, TPI analysis published today found. "This indicates both that historical rates of emissions reduction have been inadequate, and that, on average, company targets imply plans to postpone deep emissions cuts until the 2040s," TPI said.

The analysis indicates that the world's highest-emitting companies will cumulatively overshoot the emissions intensity budget for 2020-50 required to keep to the 1.5°C goal by 61pc, based on a calculation that weights firms and sectors by market capitalisation.

"Oil and gas companies are a major driver of the exceedance," TPI said. Only 6pc of those analysed have plans aligned with the 2°C goal in the medium and long term — 2035 and 2050. Food producers are also one of the least-aligned sectors, at just 8pc.

The sector with the most companies aligned to the goal is diversified mining at 50pc, followed by the steel sector at 46pc and electricity at 41pc.

Regionally, European firms have the highest rate of alignment at 66pc, followed by 64pc of Australasian companies and 56pc of Japanese groups.

Only 18pc of Chinese companies are either aligned with the temperature goals or disclosed the information needed for analysis, and only 30pc of those headquartered in other Asian countries.

By Victoria Hatherick