After developing a way of measuring if businesses are on track to meet climate goals agreed upon during the 2015 Paris Agreement, researchers at the University of Queensland (UQ), Oxford and Princeton have found that a number of businesses are failing to reduce their greenhouse gas emissions significantly.
The Paris Climate Accords is an international treaty that establishes a global framework to avoid dangerous climate change by limiting global warming to well below 2°C and pursuing efforts to limit it to 1.5°C.
Companies are required to align their greenhouse gas emission reductions with the Paris Accord climate goals to avoid the worst effects of global temperature increases, the consequences of which would lead to considerable economic and financial risk for most businesses.
A report led by UQ Business School Assistant Professor Saphira Rekker found that 10 global cement companies and nine Australian utility companies were not complying with Paris Agreement targets to tackle climate change.
“After developing a new modelling framework, we analysed a total of 20 companies, and we found only one Australian electric company was compliant with the goals of the 2015 Paris Agreement,” Dr Rekker said.
“These results are alarming and show the stark reality of how businesses continue to operate without a clear plan for decarbonisation.
“It also highlights how much change is still required if the world is to comply with the Paris Agreement goals.”
For companies to be classified as Paris-Compliant, the team used four operationalisation requirements to measure compliance with the Paris targets, including calculations of their carbon budgets and re-alignment pathways.
“Stakeholders and investors want to know about their business’s climate impacts, and we need to have an accurate way of tracking progress, otherwise, the globe will fail to meet carbon budgets,“ Dr Rekker said.
“We also found there were a lot of discrepancies with previous business modelling, such as not requiring companies to outline a stringent below 2°C decarbonisation pathway, and not providing a consistent starting point.
“That’s why we developed the new framework, called Paris Compliant Pathways (PCP), to improve transparency.”
Researchers found that only multinational utility company Engie was ‘on track’ to be Paris Compliant, having retired all of its Australian coal-fired power stations at the start of 2017 and committed to retiring its remaining gas plants by 2037.
Dr Matthew Ives from Oxford University said the findings are a landmark moment in the quest to bring accountability to the Paris Agreement goals.
“The Paris Compliant Pathways framework we developed allows companies, investors, and other stakeholders to strictly evaluate companies’ performance against the goals of the Paris Agreement,” Dr Ives said.
“Ensuring companies are aligned with their Paris Compliant Pathways is important for everyone, as we are already experiencing the devastating impacts of climate change, but it’s also very important for companies and investors who need to know their exposure to transition and litigation risk and the devaluation of a company’s assets.”
Dr Chris Greig from Princeton University’s Andlinger Center for energy and the environment said the PCP framework created a new benchmark for carbon emissions transparency.
“Delving into publicly available reports, the analysis reveals the large gap between the ambitious pledges being made by many companies and their actual operations, but also that there is often insufficient data to verify alignment,” Dr Greig said.
“By partnering with more companies and financial institutions, we hope that we can expand our coverage and improve the ability to track alignment with the Paris goals.”
In a follow-up study, in partnership with Norges Bank Investment Management, the researchers examined emissions data from 25 steel production companies, discovering that the majority had already emitted more than their entire carbon budget allowance under a Paris-compliant pathway by 2019.
Having the Foresight to make a change
With impeccable timing to coincide with the release of this report, former Engie Impact sustainability solutions director Joshua Martin has launched a new sustainability-focused consultancy today.
Foresight, comprised of consulting, assurance and impact capital arms, aims to bridge the considerable gap in the Australian market for a dedicated climate change and sustainability group that can cater to the growing demand for advisory and assurance services.
Helping to strategise and operationalise decarbonisation initiatives for businesses and governments, Foresight will provide counsel and advisory services to help drive significant and measurable change on the path to Net Zero.
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