Industrial GHG Emissions: Accountability and the future

A recent report by the World Bank and CDP has revealed that a cluster of just 157 global companies and their associated suppliers are responsible for the majority of industrial greenhouse gas emissions. 

Additionally, it seems that the urgency of the situation has not been fully acknowledged by these companies. The report found that just 40% of these firms have committed to achieving net-zero emissions by 2050. The lack of long-term climate strategies is another area of concern, with a mere 20% having such strategies in place. When it comes to short-term emission reduction targets, the percentage of companies having them drops to a startling low of 5%. These figures present an alarming picture of corporate commitment towards climate action.

Industrial emissions are the primary drivers of this issue, mainly derived from fossil fuel use. According to the Intergovernmental Panel on Climate Change (IPCC), these emissions account for two-thirds of global greenhouse gas emissions. As asset managers and stewardship professionals, we must consider the weight of this fact in our investment strategies and corporate governance practices.

But it’s not all doom and gloom

Initiatives like the Exponential Roadmap Initiative, launched as part of the Race to Zero campaign in September 2020, offer a glimmer of hope. The founding corporate members of the 1.5C supply chain leaders include renowned MNEs like Ikea, Unilever, BT, Ericsson, and Telia, showcasing their commitment towards this cause.

This initiative, along with its other workstreams, is backed by the We Mean Business coalition, lending further credibility and support to its objectives. Since its inception, several other industry giants have joined the initiative, including Telefónica, Nestlé, and waste management firm Ragn-Sells. The initiative today represents an impressive $440bn in annual revenue.

Such initiatives represent a proactive approach in the corporate world towards mitigating climate change. However, they should not be the exception but the rule. The urgent need is for all companies, especially those responsible for substantial emissions, to establish and act upon comprehensive climate strategies.

Asset managers and stewardship professionals have a pivotal role to play in this context. The investment community can exert significant influence on these companies by directing capital towards those that demonstrate a genuine commitment to sustainability.

Moreover, stewardship professionals can work towards establishing robust governance practices, encouraging transparency and accountability in reporting emissions. They can push for boards to include climate competency and hold companies accountable for their climate change mitigation commitments.

In summary, while the revelation from the World Bank and CDP report may be troubling, it provides a clear roadmap of where attention needs to be focused. The challenge ahead is substantial, but with determined action and focused strategies, it is a challenge that can be overcome. For asset managers and stewardship professionals, the call to action has never been clearer.

 

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