Weekly Roundup October 21
Invert is focused on providing clients and subscribers up-to-date news on net-zero developments, carbon markets, and how many sectors are evolving to meet climate change goals and ESG requirements.
Climate Action 100+ Net Zero Company Benchmark Shows Continued Progress on Net Zero Commitments is Not Matched by Credible Decarbonisation Strategies
Progress on climate commitments have not been matched by credible plans, according to the second round of Benchmark assessments on focus companies from Climate Action 100+, the World’s largest investor engagement on climate change. While the number of focus companies that have committed to net zero by 2050 or sooner across all emissions scopes has risen from 69% to 75%, there remains an absence of short- and medium-term emissions reductions targets aligned with limiting warming to 1.5°C. In addition to net zero targets not being supported by strategies to deliver them, just over half of companies have set targets which cover material scope 3 emissions and only 10% of companies have fully aligned their capital allocation plans with their GHG targets.
Invert Insights: The world’s largest corporate emitters continue to fall short on their climate commitments and deliver on near-term transition plans to meet the deep emissions cuts needed to stick to the global carbon budget. For many organizations, decarbonization pathways to reduce emissions by 50% by 2030 and stick to 1.5°C warming scenarios are currently within reach if climate action begins today.
The number of companies reporting on climate-related risks and opportunities and the amount of information being disclosed have both been rising according to the Task Force on Climate-related Financial Disclosures’ (TCFD) latest status report. Although TCFD alignment has been rising year-over-year since its recommendations were released in 2017, only 43% of companies reported on at least five of the recommended 11 disclosures, and only 4% reported on all 11 disclosures.
Invert Insights: Climate-related disclosures are increasingly being used by investors to price physical and transition risks, with some studies showing climate-related risks being reflected in the price of certain asset types. As these risks continue to manifest, demand on companies by investors and financial institutions to provide complete climate disclosures will continue to rise.
ESG remains the top business risk and opportunity for the mining industry, according to EY’s latest report ranking the top 10 mining and metals risks and opportunities. Following ESG, survey respondents ranked geopolitics and climate change as the number two and three risks facing the mining industry in 2023.
Invert Insights: Given the inflationary pressures and cost overruns facing the mining industry today, it is telling that the risks and opportunities surrounding ESG and climate change surpassed these challenges. The close interplay between the top three risks highlights the mining industry’s current challenge in redefining its role as an extractive industry in a world increasingly focused on sustainable outcomes.