New data, launched today (28 November 2018) by the Transition Pathway Initiative (TPI), examine how the world’s largest publicly listed companies in the autos and paper sectors are managing climate change risks and opportunities, and how their emissions performance compares to international climate goals.
TPI is backed by asset owners and investors with over £8.2 trillion ($10.7 trillion) of assets under management. The assessment of companies’ carbon management and performance is carried out by the London School of Economics’ Grantham Research Institute on Climate Change and the Environment, supported by data from FTSE Russell.
The new data are an update of TPI assessments of the autos and paper sectors published in February 2018. The findings from the assessment of 21 automobile manufacturers and 18 paper companies show that:
Autos is one of the highest performing sectors that TPI has assessed on carbon Management Quality, second only to electricity. The average company in this sector is at the stage of integrating climate change into operational decision-making, having set emissions reduction targets and disclosed operational (i.e. Scope 1 and 2) carbon emissions.
However, six auto manufacturers still either do not acknowledge climate change as a business issue in their public disclosures, or have not progressed beyond mere acknowledgement. This list includes Tesla, which, while only producing electric vehicles, does not currently provide investors with any disclosures of its carbon management practices.
The paper sector continues to be an average performer on carbon Management Quality, similar to other high-carbon manufacturing sectors like cement and steel.
Very few companies in either sector have incorporated climate risks and opportunities into corporate strategy or undertake climate scenario planning, two key elements of good climate governance emphasised by the FSB Taskforce on Climate-related Financial Disclosures (TCFD).
Most automobile manufacturers’ fleets are currently too emissions-intensive to be aligned with the Paris Agreement goals. More than half of auto makers do not have fleet emissions targets extending to 2020 or beyond, and those without targets have higher fleet emissions today. However, of the 10 manufacturers with fleet emissions targets extending to 2020, most will be aligned with the Paris Agreement goals in some form.
Six of the world’s largest publicly listed paper producers do not provide sufficient disclosures for their emissions intensity to be calculated. However, most of those who do provide adequate disclosures start aligned with the Paris Agreement goals, including International Paper, by far the biggest company in the sector.
In 2020, 6 out of the 8 paper producers with targets are aligned with the Paris Agreement in some form; 4 are aligned with a Below 2 Degrees benchmark.
Commenting on the study, Professor Simon Dietz of the London School of Economics Grantham Research Institute, said: “We see some examples of good practice in both of these sectors, but there is a shortage of long-term emissions targets, which deprives investors of a clear signal of company direction on climate change. It is also interesting to see how much companies still have to do to be in line with the disclosure recommendations of the TCFD.”
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