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The world is off track to meet its climate goals. Meanwhile, major polluters like Shell and BP are shifting their focus to fossil fuels.
The vast majority of the world’s largest companies have done almost nothing in the past five years to reduce global warming pollution enough to avoid catastrophic climate change.
Big companies are more likely to contribute to extreme levels of warming or not disclose their greenhouse gas emissions at all, according to a new report from ESG Book, seen by CNN.
The leading provider of sustainability data found that the efforts of just 22% of the world’s 500 largest public companies by market value are in line with the Paris Agreement, aimed at limiting global warming to 1.5 degrees Celsius Celsius compared to pre-industrial levels. That’s a meager gain from 18% of companies in 2018.
Climate scientists see a 1.5 degree rise in global average temperature as a tipping point, beyond which the chances of extreme floods, droughts, wildfires and food shortages could dramatically increase.
Nearly half, or 45%, of businesses are aligned with warming of at least 2.7 degrees Celsius, a disastrous level of warming that could expose billions of people to dangerously hot conditions. That’s down from 61% in 2018.
Our data presents a clear message: We need to do more and we need to do it quickly, said Daniel Klier, CEO of ESG Book.
Without a fundamental change in how the global economy operates, it’s not obvious how we see significant change.
The report is the latest in a series of evidence that the world is off track to achieve its goal climate goals. At the same time, major polluters like Shell and BP (BP) are shifting their focus to fossil fuel production after a year of windfall profits helped by rising oil and gas prices.
In its analysis, ESG Book assigned temperature scores to companies based on publicly reported emissions data and factors such as emissions reduction goals to determine companies’ contribution to global climate goals.
The analysis covered companies with a market value of at least $10 billion in the United States, United Kingdom, China, India and the European Union.
It accounted for direct emissions from operations and indirect emissions from the use of the company’s products. This is especially important for oil and gas companies as most of their emissions are generated from the combustion of their products such as gasoline and jet fuel.
In the UK, India and the EU, the number of companies with emissions reduction targets in line with the Paris Agreement has hardly changed since 2018.
Progress in the US and China has been better, albeit on a lower basis.
In the US, 20% of businesses are Paris-aligned, up from 11% in 2018. In China, 12% are Paris-aligned, up from just 3% five years ago.
The encouraging thing is that we know what levers to pull and many of these companies are now much more active. But as the data shows, not everyone is necessarily moving at the right pace, Klier told CNN.
In his view, it will take a combination of stricter government policies, changes in consumer behavior and technological breakthroughs to bring about a significant change in the current climate trajectory.
Institutional investors, such as pension funds, have them too an important role to play in directing more capital towards renewable technologies, he said.
There are signs that this flow of money is accelerating. According to the International Energy Agency, investment in solar energy is expected to exceed investment in oil production for the first time this year.
For every dollar invested in fossil fuels, approximately $1.7 goes to clean energy. Five years ago, this ratio was one to one, IEA Executive Director Fatih Birol said in a report last month.
However, just over $1 trillion is expected to go towards oil, gas and coal this year, significantly above the level consistent with achieving net-zero emissions by 2050, the IEA said.
There is now a 66 percent chance that the planet’s temperature will exceed 1.5 degrees Celsius of warming for at least one year in the next five years, the World Meteorological Organization said in a May report. While this would only be a temporary breach, it would be the clearest signal of the rate at which climate change is accelerating, leading to rapid sea level rise, more extreme weather and the disappearance of vital ecosystems, the group said.
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