Business strategies failing to keep pace with the need to decarbonise

02/07/2018

Transition Pathway Initiative new analysis of the electricity, coal and oil and gas sectors

The Transition Pathway Initiative, now backed by over £7/$9.3 trillion in assets under management, released today its report The State of Transition in the Coal Mining, Electricity and Oil and Gas Sectors.

The report analyses 105 of the world’s largest public companies in three key sectors: coal mining, electricity, and oil and gas.

The report shows significant improvement in companies’ carbon policies and management processes but concludes that most are yet to adopt business strategies that align with the goals of the Paris Agreement.

The report was released today at the Asset Owners’ State of Transition Climate Summit held in partnership with FTSE Russell and the London School of Economics at the London Stock Exchange, where the world’s leading asset owners worked together to identify interventions that asset owners can make to help shape the transition to a low carbon economy.

Key findings


Emma Howard Boyd, Chair of the Environment Agency, said:“It’s heartening to see many companies have implemented a wide range of carbon management practices, but it is concerning that companies are yet to align their business strategies with the goals of the Paris Agreement. On current trajectories, global temperature rise is expected to exceed 2°C by 2100, and a 3 to 4°C rise is likely. If investors are to have confidence risks are managed appropriately we need to see more on resilience to the physical threats of climate change in addition to better carbon management.”

Adam Matthews, Co-Chair of the Transition Pathway Initiative and Director of Engagement for the Church of England Pensions Board, said: “Today’s report identifiers that Increasing numbers of electricity utilities are making the transition to renewable energy. However, most companies still do not take a strategic approach to climate change, and most electricity utilities either do not have quantitative, long-term emissions targets, or their targets do not keep pace with what the Paris Agreement requires.”

Professor Simon Dietz at the London School of Economics, who led the analysis, said:“Carbon performance is a crucial measure and in March 2018 we published a discussion paper, which sets out a proposal for how Carbon Performance could be assessed in the oil and gas sector in future.We are now working with companies in the sector to encourage them to provide the disclosures we need to assess their future performance.”

Download the report – The State of Transition in the Coal Mining, Electricity and Oil and Gas Sectors

Download the presentation given by Professor Simon Dietz at the Asset Owners’ State of Transition Climate Summit

 

ENDS



Notes to editors

The latest report updates assessments published by TPI in 2017, extending coverage in the electricity sector from 20 to 41 companies and in the oil and gas sector from 20 to 45 companies. The report also covers 19 of the world’s largest publicly listed mining companies that were engaged in mining coal in 2017/18.

TPI makes two assessments of companies: i) their corporate governance of climate change issues (‘management quality’), and ii) a forward-looking assessment of companies’ CO2 emissions and how they align with international targets (‘carbon performance’).

TPI Management Assessment

TPI Performance Assessment


About TPI

The TPI is an asset owner-led and asset manager-supported global initiative which identifies companies’ preparedness for transition to the low carbon economy, supporting efforts to address climate change. Launched in January 2017, academically-robust and publicly available online, it is now supported by over 25 global asset owners with more than £7 trillion/$9.3 trillion combined AUM.