As world leaders and industry stakeholders gear up for COP28 in Dubai, the latest edition of the MSCI Net-Zero Tracker reveals a concerning trend: The pace of decarbonization by listed companies in the world’s largest economies is projected to decelerate in the coming decade.
Having examined listed companies in 16 of the G20 nations, the report found that companies in 13 of these 16 G20 countries are due to decarbonize at a pace of 2.9% per year on average. Between the signing of the Paris Agreement in 2015 and now, these same companies have been decarbonizing at a pace of 3.2% a year.
At the same time, the pace of decarbonization by these companies’ home countries is expected to accelerate, MSCI finds, writing:
“Governments in those countries are projected to reduce national greenhouse gas emissions by an average of 4.5% each year between 2022 and 2030, a faster rate of reduction than the 0.8% average achieved annually following the Paris Agreement.”
The report also discloses that if current trends persist, listed companies are on track to surpass the emissions limit required to keep the global temperature rise below 1.5°C by April 2026 — three months earlier than previously estimated in July 2023.
Alarmingly, only 22% of companies align with a 1.5°C goal while 55% “align with global warming equal to or below 2°C, the high end of the Paris Agreement’s uppermost temperature threshold,” according to MSCI.
In another concerning projection, public companies are expected to emit 11% more direct (Scope 1) greenhouse gas emissions this year compared to 2022.
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As to the progress made, the number of listed companies with a climate target that aspires to reach net zero is now 50% higher than it was two years ago, and the companies’ projected emissions “are on track to warm the planet 2.5°C above preindustrial levels, a half degree less than two years ago.”
“Close to one-fifth (19%) of companies have published a science-based net-zero target that covers all their financially relevant emissions, more than triple the share of such targets over the same period,” the report finds.
Linda-Eling Lee, Founding Director and Head of the MSCI Sustainability Institute, emphasized the need for urgent action:
“Despite progress, the world has not moved the needle enough to be on track to achieve 1.5°C. Following a strong start, progress from listed companies in the remainder of the decade is set to slow now that companies are cutting the emissions they can cut most readily. That raises the importance for governments of accelerating climate action through policy that can boost supply of clean energy and development of transition technologies.”
Looking forward, the report says the findings “suggest a need to raise global climate ambition and achieve technological breakthroughs if society is to stave off the worst impacts of global warming.”
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — In the Featured Photo: Skyscrapers. Featured Photo Credit: Egor Komarov.