Two years ago, the Paris Agreement fired the gun in the race to a low-carbon economy and the message to business leaders could not have been clearer. Embrace the opportunities of a once-in-a generation economic transition, or risk being left behind. So, as final preparations for next month’s COP23 in Germany are made, it is an opportune moment to assess whether the world’s largest companies are gathering the momentum required to meet the Paris goals.
Picking up the pace
That’s why CDP today releases its ‘Picking up the pace’ analysis of the climate action being taken by over a thousand multinationals including the likes of Samsung, Coca Cola, Anglo American and Unilever.
The headline finding from the comprehensive research is that corporates are closing the emissions gap. More companies are setting tougher emissions reduction targets, producing more low-carbon products and consuming more renewable energy. If all current targets are achieved then the companies in the sample would be 31% of the way to being consistent with keeping global warming below 2 degrees; a step up from the 25% that the same analysis reported last year.
Perhaps most encouragingly, 14% of the companies have committed to the Science Based Targets initiative, meaning their emissions reduction target is, or will be, in line with what science says is required to prevent dangerous climate change. Companies with science-based targets (SBTs) are at the very forefront of global climate action, taking steps now to align their strategies with the goals of the Paris deal and give themselves a competitive advantage in the race ahead.
Companies like BT, AkzoNobel and EDP are among the 151 companies in our sample that have joined the initiative, up from 94 last year. BT, for example, has an ambitious SBT to reduce its direct carbon emissions intensity by 87% by 2030 and purchase 100% of its energy from renewable sources by 2020. An additional 30% – 317 companies – anticipate setting a science-based target within two years. With the companies in our sample representing 12% of global greenhouse gas emissions, that’s a huge amount of emissions that will be prevented if they follow through.
Our analysis also shows how the race to a low-carbon economy is driving innovation. Over a third of companies now generate revenue from low carbon products such as electric vehicles and zero-energy buildings. Sweden’s first zero-energy neighbourhood, Solallén, is a perfect example: developed by multinational construction company Skanska AB, it is designed to generate more energy than it uses, saving both carbon and energy costs.
Use and production of renewable energy is another mark of this innovation. The number of companies with targets for renewable energy consumption has risen by 23% and there is an even greater rise – 36% – in corporates setting goals to produce their own renewable energy. One of the things driving this is carbon pricing; 32% are now using internal carbon pricing, with another 18% saying they plan to implement it within the next two years.
Winners and losers
As with any race, we are beginning to see winners and losers emerging as the pace accelerates.
Today, CDP also released its environmental A List for 2017, naming 159 companies with the best scores for their approaches to climate change, water and deforestation. The 159 A List companies include Colgate Palmolive, Diageo, J Sainsbury, Sky and Sony Corporation. Unilever and L’Oréal lead the way as the only two companies to achieve A’s across all three areas of climate change, water and forests.
The A Listers demonstrate how business can reduce CO2 emissions, increase water security and tackle deforestation whilst making a profit. For example, since A Lister Nissan launched its Leaf electric car in 2010 it has sold almost a quarter of a million electric vehicles (EVs) and become the leading manufacturer of mass-market EVs.
Progress in the US is especially interesting. Despite the lack of political support in the climate fight, the US private sector is showing continued leadership in the charge towards a sustainable future. There is a total of 32 US firms on the A List, more than any other nation, and corporations such as Apple, Bank of America, Starbucks and Walmart have all committed to procure 100% of their electricity from renewable sources in the coming years
Easier said than done
While it is good news that 89% of world’s biggest, most environmentally-impactful companies now have carbon emissions targets, it is important to clarify the difference between setting a target and achieving it.
In 2016 the world passed the symbolic threshold of 400ppm (parts per million) of carbon dioxide in the atmosphere and the overall concentrations of carbon dioxide, methane, nitrous oxide and other greenhouse gases have been generally flat over the last few years rather than declining.
However, we are on the first bend of a long race. Just as the Paris Agreement required all countries to put forward their best efforts through ‘Nationally Determined Contributions’ and to strengthen these efforts in the years ahead, so companies must also ratchet up their actual achievements in the years to come and disclose the details and data that the world requires to monitor their efforts. We must all ensure the race to Paris heats up faster than the climate does.
Paul Simpson is CEO of CDP, a non-profit global environmental disclosure platform.
The Picking up the pace: tracking progress on corporate climate action and the 2017 Climate, Water and Forests A Lists are available on the CDP website.