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MSCI: Global companies failing on climate goals

Moreover, the world’s listed companies will cause global temperatures to rise by 3°C, meaning the climate targets laid down in the Paris Agreement are increasingly out of reach.

MSCI’s latest Net-Zero Tracker reveals that less than 10% of public companies are aligned with the 1.5°C temperature rise threshold.

The global carbon budget to limit global warming to 1.5°C will be exhausted by November 2026, MSCI stated.

“The rapidly shrinking timeframe is being driven by the significant rise in greenhouse gas emissions from public companies as global economic activity rebounds,” the firm said.

Emissions are set to rise by 6.7% in 2021 alone, according to the Net-Zero Tracker, which is a quarterly gauge of climate change progress across a global universe of 9,300 public companies based on the MSCI All Country World Investible Market Index.

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Although the energy, materials and utilities sectors account for the lion’s share of global corporate emissions, MSCI found high emitters in every sector – even typically low emissions industries like healthcare.

Companies in developed economies are projected to become more carbon efficient than those in emerging markets but no region yet aligns with the Paris Agreement target of limiting global warming to 1.5°C compared to pre-industrial levels.

Energy companies – including Saudi Arabian Oil Company, India Coal, BP and Exxon – notably dominated the top ten global emitters.

Henry Fernandez, chair and chief executive officer, MSCI, said: “As the extreme weather events of 2021 have reminded us, climate change is not a ‘potential’ problem 30 or 40 years down the road.

“It is a clear and present danger to our way of life right now. What we do over the next half-decade — and especially at COP26 in Glasgow — could make the difference between avoiding or experiencing the worst climate impacts.”

Fernandez urged “firm” action rather than words at COP26 to divert an “imminent” crisis. The report concluded that the world’s companies are running out of time to slow the worst effects of climate change.

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