September 19, 2019 / News
Energy sector making slow progress on climate threat
By Joe McGrath, ESG Clarity
Progress is 'not quick enough' says report by the Transition Pathway Initiative
The slow progress on climate crisis initiatives by some energy companies is becoming an “enormous concern”, according to a report released by a large group of influential investors.
The Transition Pathway Initiative (TPI), an investor group that has more than 50 supporters with $15 trillion of combined assets under management and advice, said “climate progress in the energy sector is inching rather than accelerating towards a low-carbon future”.
TPI, which was founded in 2017, published a detailed report on the “management quality” of 135 companies in the energy sector. Using publicly disclosed data, TPI assessed the progress companies are making on the transition to a low-carbon economy and supporting efforts to mitigate climate change. It found too few had improved at the rate it had expected, while others had barely moved at all.
Adam Matthews, co-chair of the TPI, and director of ethics & engagement at Church of England Pensions Board, said: “Despite a climate emergency being declared across multiple countries, this new research shows the energy sector is inching rather than accelerating towards a low-carbon future. It is not quick enough.”
He highlighted how “too many fossil fuel companies are dragging their feet both on governance and actual carbon performance”.
However, the report said the contrast between the carbon performance of electricity utilities and oil and gas producers was “stark”.
It found the electricity sector fared better than any other sector in the TPI database on carbon performance, with almost half of companies already aligned with Paris Agreement 2030 requirements or set to be, on the basis of emissions targets they have set.
Conversely the oil and gas sector is the worst performing TPI sector on carbon performance. Only two companies plan to be aligned with the least ambitious benchmark (Paris Pledges) by 2050, namely Shell and Repsol.
“This latest data is of enormous concern and the pace of change has to increase in line with the urgency of the issue,” said Matthews. “Investor engagement has to ensure companies align with a pathway that keeps global warming below 2⁰C.”
TPI has set out targets and actions companies in the sector should aim to achieve that would help their transition journey.
“We know it can be done and there is no excuse for not doing so,” said Matthews.