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Majority of largest companies falling short in climate change efforts

02:14 PM Jun 08, 2023 IST | Ground Report
majority of largest companies falling short in climate change efforts

A new report from ESG Book, seen by CNN, reveals that most of the world's largest companies have not made enough progress in reducing their planet-warming emissions in the last five years, putting the world at risk of suffering catastrophic climate change.

Analysis from the leading provider of sustainability data shows that only 22% of the top 500 public companies by market value have actions aligned with the goals of the Paris Agreement, which aims to limit global warming to 1.5 degrees Celsius per year above pre-industrial levels. This represents a marginal increase from the 18% recorded in 2018.


Climate scientists have identified a 1.5-degree Celsius rise in global temperatures as a critical threshold, beyond which the likelihood of extreme flooding, drought, wildfire and food shortages increases significantly.

The report is the latest in a series of evidence that the world is a long way from reaching its climate targets. At the same time, major polluters such as Shell and BP (BP) are turning their attention back to fuel production after a year of bumper profits thanks to rising oil and gas prices.


ESG Book CEO Daniel Klier stressed the urgent need for decisive action, stating: "Our data presents a clear message: we need to do more, and we need to do it quickly. Without fundamental change in the way the global economy operates, It's not obvious how we see meaningful change."


ESG Book's analysis involved assigning "temperature scores" to companies based on publicly reported emissions data, including emissions reduction targets, to assess their contributions to global climate goals. The study covered companies with a market value of at least $10 billion in the United States, the United Kingdom, China, India, and the European Union.


It considered both direct emissions from operations and indirect emissions from the use of the companies' products. This distinction is particularly crucial for oil and gas companies, since most of their emissions come from burning their products, such as gasoline and jet fuel.

The report highlights the lack of progress on emissions reduction targets among companies in the UK, India and the European Union since 2018. The US and China have seen relatively better progress, albeit from a more recent starting low point. In the United States, the percentage of companies aligned with Paris has increased from 11% in 2018 to 20%, while in China it has increased from 3% to 12% in the same period.

While acknowledging the increased activity of many companies, Klier believes that a combination of stricter government policies, changes in consumer behavior, and technological advances are needed to make a significant change in the current climate trajectory.

Recent data from the International Energy Agency (IEA) indicates a positive trend in capital flow, with investment in solar power forecast to exceed investment in oil production for the first time this year. IEA executive director Fatih Birol said that for every dollar invested in fossil fuels, about $1.7 now goes to clean energy, compared with a one-to-one ratio five years ago.

The IEA warns that investments in oil, gas and coal are still expected to exceed levels compatible with achieving net zero emissions by 2050, with more than $1 trillion projected to flow into these sectors this year.

In May, the World Meteorological Organization reported a 66% chance of global temperatures exceeding the 1.5 degree Celsius threshold for at least one year within the next five years. This would serve as a stark reminder of the accelerating pace of climate change, leading to rapid sea level rise, increasingly severe weather events, and the irreversible loss of critical ecosystems.

As the world faces the pressing challenge of climate change, the ESG Book report highlights the urgent need for a widespread and concerted effort by companies, governments and individuals to address the growing climate crisis. Failing to act decisively now could have dire consequences for future generations and the planet as a whole.

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