G7 firms failing Paris Climate Agreement: CDP-Oliver Wyman analysis

The Paris Climate Agreement targets a 1.5 degrees C limit to global warming, a goal that the United Nations Intergovernmental Panel on Climate Change (IPCC) says must be met to avoid even more catastrophic impacts of climate change.

Based on current emissions reduction targets set by companies, no G7 country has a corporate sector likely to decarbonise fast enough to meet the 1.5 degrees C goal.

On aggregate across the G7, corporate emissions targets are calculated as aligned with 2.7 degrees C of global warming, Oliver Wyman said in a press release.

In Germany and Italy, collective emissions are expected to match the pace of decarbonisation required to limit global warming to 2.2 degrees C. The two leading countries are followed by France (2.3 degrees C), the United Kingdom (2.6 degrees C) and the United States (2.8 degrees C). Canadian companies fare worst in the G7, with targets aligned with 3.1 degrees C of warming on average.

Temperature ratings in the study reflect corporate ambition, rather than national climate policies or nationally-determined contributions (NDCs). However, with COP27 approaching, the gap between what is promised by policymakers and the real economy is considerable, the release said.

The analysis shows a clear and consistent outperformance by European companies over North American and Asian peers across all industries. 

The European power generation sector, for example, is ahead of all sectors globally on 1.9 degrees C of warming. That compares to 2.1 degrees C for North American companies and 3 degrees C for Asian companies. Target-setting in the industry in Europe is much more advanced, with around 80 per cent of all emissions covered by a valid 2 degrees C target or better.

On the whole, the European corporate sector improved from 2.7 degrees C in 2020 to 2.4 degrees C in 2022.

Collectively, companies with science-based targets have reduced emissions 25 per cent since 2015, compared to an increase of 3.4 per cent in global emissions from energy and industry. The high temperature ratings seen in countries like Canada and the United States are largely the result of companies completely lacking targets, rather than targets that lack ambition.

In Canada, 43 per cent of all reported emissions are covered by a target, compared to France and Germany, for example, where over 90 per cent of reported corporate emissions are from companies with disclosed targets.

Fibre2Fashion News Desk (DS)