COP26 warning: companies listed around the world will cause a temperature rise of 3 ° C

NEW YORK–(COMMERCIAL THREAD) – Paris Agreement climate targets are increasingly out of reach as listed global companies will cause global temperatures to rise by 3 ° C, according to the latest MSCI Net-Zero Tracker.

With less than 10% of public enterprises aligned on a temperature increase threshold of 1.5 ° C, the global carbon budget to limit global warming to 1.5 ° C will be exhausted by November 2026. This deadline has advanced five months in just 90 days from the launch of the Net-Zero Tracker in July.

Henry Fernandez, President and CEO of MSCI, comments: “The results of the MSCI Net-Zero Tracker are expected to dramatically increase the world’s sense of urgency to reduce greenhouse gas emissions. As the extreme weather events of 2021 reminded us, climate change is not a “potential” problem in 30 or 40 years. It is a clear and present danger to our way of life at this time. What we do over the next half decade – and especially at COP26 in Glasgow – could make the difference between avoiding or suffering the worst climate impacts. We are calling for firm action rather than words at COP26 to divert the world from an impending crisis and chart the course towards a sustainable future. ”

Emissions are expected to increase 6.7% in 2021

The rapid reduction in the lead time is due to the significant increase in greenhouse gas emissions from state-owned enterprises as global economic activity rebounds.

The Net-Zero Tracker, a quarterly indicator of climate change progress in a global universe of 9,300 public companies based on the MSCI All Country World Investable Market Index (ACWI IMI), finds that corporate emissions are expected to increase by 6, 7% this year.

No area or region is safe

The Net-Zero Tracker also finds that less than half of listed companies are aligned with a 2 ° C temperature rise. No sector or region is aligned with the 2 ° C target. Even low-emission industries such as healthcare, information technology, and financial services have outliers consuming a disproportionate share of their industry’s remaining budget.

From a regional perspective, although businesses in developed economies are expected to become more carbon-efficient this century, every region still emits excessive emissions. The problem is most extreme in Emerging Markets (EM) EMEA, where the implied temperature rise of listed companies is 4.8 ° C, followed by EM Americas and EM Asia, which are expected to rise by 3.8 ° C. and 3.4 ° C, respectively. To address this, companies need to reduce their absolute carbon emissions by an average of 10% per year. However, from 2016 to 2020, less than a quarter of publicly traded companies worldwide achieved this feat.

Major gaps in program disclosure – laggards revealed

As investors and policymakers seek new levels of transparency on emissions, the latest Net-Zero Tracker shows:

  • Saudi Arabian Oil Company, Gazprom PAO and Coal India Limited are the top three listed companies with the largest carbon footprint
  • Shaanxi Coal Industry Company Ltd Is Largest Emitter To Disclose Any Of Its Greenhouse Gas Emissions
  • GlaxoSmithKline plc, H&M Hennes & Mauritz and Électricité de France SA are among the top 10 companies that have published the most detailed emission reduction targets
  • Gazprom PAO, AP Møller – Mærsk A / S and Toyota Industries Corporation declared additional scopes in the previous quarter and now report all company emissions in most of the relevant categories (i.e. 1, 2 and 3)

Remy Briand, Global Head of ESG and Climate at MSCI, adds: “While it’s encouraging that some of the world’s largest listed companies are taking important steps in expanding their emissions reporting and setting decarbonization targets, the Net-Zero Tracker shows that significant gaps remain as many do not disclose. not this crucial information. Climate information is essential for investors to help them assess the carbon intensity of companies, model climate-related financial risk and impact on portfolio performance, and allocate capital accordingly. Without accurate information, the chances of businesses and investors reaching net zero are a distant reality. We call on policymakers and financial regulators at COP26 to make climate-related disclosures based on international standards mandatory. ”

About MSCI inc.

MSCI is a leading provider of decision support tools and services to the global investment community. With over 50 years of research, data and technology expertise, we make better investment decisions by empowering clients to understand and analyze key risk and reward drivers and create with confidence more efficient portfolios. We create cutting-edge, research-powered solutions that clients use to better understand and improve transparency throughout the investment process.

Notes to Editors

* Gigaton equals one billion tons

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