Businesses around the world are set to deliver just a quarter of the emissions reductions required to meet the Paris Agreement limiting global warming to under 2°C, according to a report from a global carbon monitoring initiative.
CDP, formerly known as the Carbon Disclosure Project, has released the first in an annual series of reports to establish a baseline for corporate action on climate change.
Working with the We Mean Business coalition, it will monitor emissions reductions; the adoption of targets based on the most up-to-date climate science, known as science based targets; use of internal carbon prices; and the uptake of renewable energy.
The study placed 1,839 companies in its sample, including all members of the UK’s FTSE 350, receiving data from 1,089 in total for 2015. The vast majority of these firms (85%) were found to have already set targets for emissions reduction, a significant improvement on previous years.
However, only 14% have set carbon reduction goals past 2030 and the report concluded that if those in the sample were to achieve their current targets, they could realise 1Gt CO2e of reductions by 2030 below current emission levels.
This is only around 25% of the 4GtCO2 e that this group of companies would need to achieve in order to be in line with a 2°C pathway. This gap is equal to nearly 50% of these companies’ current total emissions
According to CDP, the low proportion of companies that have set carbon reduction goals past 2030 represents “a situation that must change to achieve a transition to well below 2°C”.
The report has also called for greater action from policymakers, stating: “Once governments create policy that favours a low-carbon economy, companies can be even more ambitious in their efforts to cut emissions. That will, in turn, make it easier for governments to achieve their NDCs [nationally determined contributions] – and even go beyond them.”
This echoes the words of Christiana Figueres, former executive secretary of the UNFCCC, who said in June the one thing she felt was necessary for environmental targets outlined at last year’s COP21 summit in Paris was closer collaboration between businesses and governments.
However, by taking its data from 2015 (almost a full year before COP21 in December) the CDP admits that it expects significantly more uptake in long term emissions reduction goals in next year’s report.
Rising levels of corporate renewable energy
Despite the low percentage of companies within the study with a carbon reduction plan past the 2020’s, the report identified a number of positive signs for corporate climate action. For example, targets to increase the proportion of energy generated from renewable sources are being set across all sectors.
So far, only 5% of these companies are thought to have targets for increasing their renewable energy generation, while 11% have targets for renewable energy consumption. However, these firms span a wide range of industries and CDP claims renewable energy will play a major role in the corporate global shift to a low carbon economy.
It uses Sky as an example of a company building renewables into their energy planning. A statement from the media company explains: “We’ve invested £7 million in the development of renewables at our main campuses in England and Scotland, which in 2014/15 accounted for 6% of our energy usage, achieving significant savings in avoided energy costs and worked to future-proof our energy supply at these key sites, reducing our reliance on fossil fuels.”
Decoupling revenue growth from emissions reduction
The report also identifies key UK successes in “decoupling” emissions growth from revenue growth, with J. Sainsbury's included in the group of 62 companies within the study that have achieved “impressive and consistent year on year achievements”.
Between 2011-2016, the supermarket reduced its emissions by 22% while increasing revenue by 18%, achieving a 28% drop in emissions intensity. During that period, the company introduced low-carbon energy technology at stores and depots, liquid natural gas and liquid bio-methane in its dual-fuel vehicle fleet, LED retrofit programmes, lighting controls and associated energy efficiency measures.
CDP claims examples like this show that business success can be achieved while contributing to the Paris Agreement goals. The 62 companies concerned increased their revenue by 29% over the last five years while reducing emissions by 26%.
The rest of the companies in the tracking sample had a 6% decrease in revenue over this period while increasing their GHG emissions by 6%.
“Switching to renewable energy or producing its own renewable energy, using internal carbon pricing to make production more efficient, using innovation to create less energy intensive systems or even selling products to help customers reduce emissions are all strategies that add to the bottom line, rather than to costs,” the report states.
As well as Sky and Sainsbury's, the report identifies the likes of RELX Group, Tesco, British Land Company and Centrica within its UK Climate A List.
It is widely believed that businesses have a major role to play in meeting the demands of the Paris Agreement, with a report issued earlier this year claiming that private sector businesses could achieve 60% of the cuts in global emissions pledged at COP21.