An analysis of over 270 leading global companies across the most CO2-intensive industries found that only 25% have set CO2 reduction strategies that align by 2030 with either the International Energy Agency’s Sustainable Development Scenario or Net Zero by 2050 scenario, and only 40% plan to be net zero by at least 2050.
While around 90% of these companies are reporting CO2 emissions data and 70% have set CO2 reduction targets, four out of the top five emitters – Huaneng Power, NTPC, China Petroleum & Chemical, and PetroChina – have yet to establish comprehensive carbon reduction targets, according to new, proprietary analysis by Bloomberg Intelligence (BI).
“Our data suggests that most companies have set goals, but only 25% align with a temperature-aligned benchmark by 2030, and only 40% plan to be net zero by at least 2050. The lack of ambition across the most CO2-intensive industries indicates a risk for investors and a major hurdle in efforts to address climate change”, said Eric Kane, Director of ESG Research, Americas, at Bloomberg Intelligence.
The report forecasts and compares emissions of companies in the airlines, chemicals, marine shipping, metals & mining, oil & gas, steel and utilities industries. It shows that total emissions will fall from over 5.7 billion metric tonnes in the latest year reported to 4.3 billion in 2030, and 1.2 billion in 2050, assuming emissions levels remain constant for those that have yet to set a target.
Eric Kane added: “While industry-specific benchmarks are applied in our BI Carbon scenario analysis, this overall trend indicates that many of the world’s top emitters are not taking aggressive enough action to reduce CO2 emissions. This suggests a significant risk for investors, as many companies in the BI Carbon coverage are likely to face increased regulation and potential costs associated with their emissions.”
The analysis by Bloomberg Intelligence shows morethan half of the utilities companies in the peer set have carbon neutral commitments. Danish power company, Ørsted, the industry’s most ambitious, aims to have carbon neutral energy generation and operations by 2025. The company currently generates more than 80% of its energy from renewables and will phase out coal (7% of total generation) by 2023.
Airlines and oil & gas companies may face above average exposure to the rising costs of carbon offsets. Of the companies with stated carbon reduction strategies in BI’s Carbon dataset, 70% of airlines and nearly 65% of oil & gas companies indicate a reliance on offsets in their overall strategy. Alaska Air Group is among leaders on BI’s Carbon scores relative to peers, but over half of their airline peers have also set targets in-line with International Energy Agency’s Net Zero by 2050 (NZE) benchmark, which calls for a 40% reduction in the levels of CO2 per passenger kilometre by 2030 and 90% by 2050 vs 2019 levels.
Shell, which has one of the most ambitious carbon targets of any oil major, states that it will offset 120 million tonnes of scope 3 emissions through nature-based offsets. JetBlue offsets all of the CO2 emissions from jet fuel for its domestic self-operated flights. In 2019, the company’s scope 1 emissions from jet fuel were just under 9 million metric tonnes.
“As the COP26 negotiations progress and carbon neutrality pledges continue to be made, our research highlights that 22 of 39 oil and gas companies have targets to be carbon neutral in their operations. Six of those 22 plan to be carbon neutral inclusive of the emissions generated from the use of their products. We expect an escalated focus on decarbonisation as firms look to differentiate themselves in their sectors,” added Eric Kane.