Publicly-listed companies around the world will burn through their 1.5°C emissions budget within five years of COP26, making the Paris Agreement climate targets increasingly out of reach, according to the MSCI Net-Zero Tracker.
The timeframe has moved forward by five months in just 90 days since the launch of the tracker.
“The findings of the MSCI Net-Zero Tracker should dramatically increase the world’s sense of urgency to reduce greenhouse gas emissions,” said Henry Fernandez, chairman and chief executive officer of MSCI.
“We urge firm action rather than words at COP26 to divert the world from an imminent crisis and chart a path toward a sustainable future.”
The tracker also estimates that company emissions are set to rise by 6.7% this year as the global economy recovers.
Lack of commitment
The tracker also found that no sector or region is aligned with their climate targets.
Over 90% of listed companies in the energy and materials sectors fail to align with a 2°C temperature rise, while companies in less carbon-intensive industries such as healthcare and financials also see outliers consuming a disproportionate share of their industry’s remaining budget.
Both developed and emerging markets are emitting in excess of their goals, the MSCI found.
Listed companies in Europe, the Middle East and Africa emerging markets lead the world with an implied temperature rise of 4.8°C, followed by those in emerging market Americas (3.8°C) and emerging market Asia (3.4°C).
Developed markets’ listed firms are also estimated to cause a temperature increase of 2.8°C to 2.9°C.
“To address this, companies need to cut their absolute carbon emissions by 10% a year on average,” said MSCI.
The MSCI Net-Zero Tracker also reveals the top 10 publicly listed companies with the largest footprint of greenhouse gas emissions.
The top nine emitters are energy companies, with Saudi Arabian Oil Company, Gazprom PAO and Coal India Limited topping the chart, while the tenth biggest emitter is automobile manufacturer Daimler AG.
While some companies are broadening their emissions reporting and setting decarbonisation targets, the MSCI Net-Zero Tracker found seven Chinese companies and three in the US are the largest emitters to not disclose any of its greenhouse gas emissions.
“Without accurate disclosures, the chances of companies and investors reaching net-zero is a distant reality. We call on policymakers and financial regulators at COP26 to make climate-related disclosures based on international standards mandatory,” said Remy Briand, global head of ESG and climate at MSCI.
The MSCI has launched Climate Lab, a tracker to monitor companies’ net zero progress. The application has access to data on carbon emissions, temperature alignment, company net zero targets, and scenario analysis.