July 10, 2019 / News

Corporate business plans highlight climate ignorance

By Joe McGrath, ESG Clarity

Research from the Transition Pathway Initiative shows that many companies haven't started planning for climate change risks

Corporate business plans highlight climate ignorance

Nearly half of all companies are failing to consider the impact of climate change in their business decisions.

That’s the conclusion of a report published on Wednesday (10 July) by the Transition Pathway Initiative, an organisation backed by 45 global investment companies, managing some $14trn in assets. The TPI was founded in 2017 to assess companies’ preparedness for the transition to a low-carbon economy.

The latest report, which looked at the corporate behaviours of 160 companies, found that just one in eight are reducing carbon emissions at a rate required to limit global warming to two degrees higher than pre-industrial levels. It found that 46% are failing to integrate climate change into their long-term business decisions.

Research for the report was carried out for the TPI by the Grantham Research Institute on Climate Change and the London School of Economics. Analysts used FTSE Russell data to assess corporate behaviours in 14 carbon-intensive sectors such as Oil and Gas, Electric Utilities, Automobiles, Airlines and Steel.

“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 Climate Agreement,” said Adam Matthews, co-chair of TPI and director of ethics & engagement at the Church of England Pensions Board.

“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 recognise the slow pace of corporate progress, will directly undermine our ability to manage the financial risks within our portfolio.”

The report also found that 25% of companies are not currently reporting on their carbon emissions while 86% are yet to make any kind of climate scenario plans, as recommended by the TCFD.