A global team of academics claims to have developed a more accurate model to measure businesses’ progress against the climate goals set out by the Paris Agreement, having today released the findings of a pilot study revealing how major corporates may be performing worse than they think against their net zero targets.
Published Wednesday in the journal Nature Communications, the study sets out a fresh framework for corporate carbon performance management, aimed at better aligning companies with the Paris Agreement goals to limit global warming to 1.5 degrees Celsius or “well below” 2C.
The research also contains the findings of a pilot analysis of 20 companies in the global cement and Australian energy sectors using the new assessment framework, which found that just one firm, Engie, was on track to meet its climate commitments and the goals of the Paris Agreement.
The global energy firm had retired all of its coal plants worldwide by the beginning of 2017, and plans to retire its remaining gas-fired power plants by the end of 2037, as it shifts towards its goal of achieving net zero carbon emissions by 2045.
But aside from Engie, the other nine energy companies assessed in the study — AGL, Energy Australia, Origin, Stanwell, CS Energy, Alinta, Delta, Millmerran and Callide — were all found to be off track for meeting the goals of the Paris Agreement.
A pilot analysis of 20 companies in the global cement and Australian energy sectors found that just one firm, Engie, was on track to meet its climate commitments and the goals of the Paris Agreement.
The same went the 10 global cement firms assessed by the study — Heidelberg, ACC, Ambuja, Ultratech, Shree, CRH (LON), Holcim, Asia Cement, Siam Cement and Cemex CPO — none of which were deemed to be on a trajectory to meet the goals of the Paris Agreement.
Study co-author Saphira Rekker, an assistant professor in sustainable finance at the University of Queensland, described the findings as “alarming,” arguing it showed current Paris Agreement pathway modeling failed to provide an accurate picture of companies’ progress in actually delivering emissions reductions.
As such, she warned that many major corporates and their investors could be exposing themselves to major risks associated with the net zero transition.
“Given that the current modeling frameworks fail to encompass a stringent below 2C decarbonization pathway nor link this pathway to a consistent starting point, we realized a new framework needed to be developed,” she explained. “It is alarming that when we applied our Paris Compliant Pathways (PCP) metrics to 10 Australian utility companies and 10 global cement firms, only one out of the 20 corporations could claim to be Paris-Compliant. This low rate of decarbonization exposes billions of investments to risk.”
The study concluded that deep decarbonization was required this decade if the sector was to prove compliant with the goals for the Paris Agreement.
The researchers also investigated decarbonization pathways in the steel sector, as part of a collaborative pilot project with Norges Bank Investment Management (NBIM), which manages $1 trillion in assets worldwide.
After examining emissions data on 25 steel production companies, they discovered that most of the firms had by 2019 already emitted more than their entire carbon budget allowance under a Paris-compliant pathway. The study concluded that deep decarbonization was required this decade if the sector was to prove compliant with the goals for the Paris Agreement.
Chris Greig, study co-author and Princeton University researcher at the Andlinger Center for Energy and the Environment, said the PCP corporate climate assessment framework developed by the study had created a new benchmark for carbon emissions transparency.
“Delving into publicly available reports, the analysis reveals the large gap between the ambitious pledges being made by many companies and their actual operations, but also that there is often insufficient data to verify alignment,” he explained. “By partnering with more companies and financial institutions, we hope that we can expand our coverage and improve the ability to track alignment with the Paris goals.”
Source: GreenBiz
