Half of companies in carbon-intensive sectors aren’t considering climate risk: report

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financial concept as a group of green trees shaped as growing finance pie chart © lightwise /123RF Stock PhotosNearly half (46 per cent) of the world’s highest-emitting publicly listed companies aren’t adequately considering climate risk in their operational decision-making, according to a new report.

Conducted for the Transition Pathway Initiative by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, the report used FTSE Russell data to analyze 160 companies in carbon-intensive sectors, such as oil and gas, electric utilities, automobiles, airlines and steel. It assessed these companies on management quality related to the climate, as well as carbon performance.

TPI is backed by global institutional investors with $14 trillion in assets, including pension funds such as the California Public Employees’ Retirement System, the Environment Agency Pension Fund and the OPSEU Pension Trust.

The report found 25 per cent of publicly listed companies aren’t reporting their own emissions at all, undermining a key recommendation of the task force for climate-related financial disclosure. Some 84 per cent don’t disclose an internal carbon price and 86 per cent have yet to undertake any disclose climate scenario planning.

Only 20 companies, or one in eight, are aligned with a pathway that would keep global warming below two-degrees Celsius, according to the report. And only 16 per cent of those assessed for their current and planned greenhouse gas emissions are aligned with that benchmark.

But some advances are being made. Among the companies assessed for the second consecutive year, 35 of 130 companies (27 per cent) have improved how they integrate climate change into their business decisions.

“TPI’s research shows that we need many more investors to engage with big-emitters across all sectors of the economy to ensure companies are setting emissions targets consistent with the goals of the Paris Agreement,” said Adam Matthews, co-chair of TPI and director of ethics and engagement at the Church of England Pensions Board, in a press release.

“Engagement is starting to show results but not at the pace needed. A failure to grasp the seriousness of the warning from this TPI report, and to recognize the slow pace of corporate progress, will directly undermine our ability as pension funds to manage the financial risks within our portfolio for our beneficiaries. The clock is ticking on irreversible climate change. The fact only one in eight of the highest-emitting firms are responding at anywhere near the pace required is an urgent challenge to investors. Investors themselves need to adopt an emergency footing otherwise the window to secure the change we need will be gone.”

This article originally appeared on CIR’s companion site, Benefitscanada.com. Read the full story here.

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