The Climate Reporting Performance of the FTSE 100, Euro STOXX 50 and DOW 30 has been released by EcoAct, an Atos company. The report, containing a leader board ranking the top 20 nations for climate disclosure, concluded that less than 1 in 5 companies within the research group have targets connected to long-term emissions reduction in order to satisfy net-zero goals and only 2% have a long-term emissions reduction goal aligned with limiting global warming to 1.5°C with several having no provision for sequestration.
The report highlights the fact that almost two thirds of companies (65%) are now committed to net zero. The FTSE 100 compares favourably against the Euro STOXX 50 and DOW 30 with 66% committed compared with 64% and 63% respectively. This represents a notable upward trend on previous years, in particular, commitments within the DOW 30 have more than doubled from 30% in 2020. The research also shows year-on-year increases in the quantity of companies setting science-based targets with 65% of companies now having set one. In addition, many more of these SBTs are in line with a well below 2⁰C or 1.5⁰C scenario – from 20% in 2020 to 51% in 2021. Despite this, the report warns that less than a fifth of businesses across all indices are able to clearly demonstrate that they have a robust long-term plan for reducing emissions and removing carbon in order to make these goals achievable.
Up to nearly 80% across all indices, with many commercial sectors including insurance, oil and gas and consumer vehicles and parts, showed alignment with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations – the biggest year-on-year increase since their launch. Developed by The Financial Stability Board, the TCFD recommendations provide a clear example of how international governments can come together to establish a framework that achieves a common climate goal.
Studies reveal that with clear frameworks to follow – such as the TCFD recommendations and the Science-Based Targets Initiative (SBTi) – a greater number of businesses are demonstrating governance on climate change and committing to short- and medium-term targets. However, the report highlights the key role of COP26 to agree the global pathway to net zero, and the strong necessity for a clear government policy in order to support and incentivise long-term emissions reductions aligned to 1.5°C.
Stuart Lemmon, Managing Director, Northern Europe, EcoAct commented: “Businesses have a vital role to play in tackling climate change but need to be led by more ambitious long-term policy and regulation, underpinned by realistic frameworks to work within, to achieve net zero. The outcomes of COP26 will be pivotal for turning intent into action’’.
“Our analysis shows that when businesses have a clear framework to follow, the uptake on climate change action is vastly accelerated. This decade represents our very last chance to implement the climate policies and strategies that will see us achieve net-zero. We no longer have time to rely on a minority of leading climate change actors. All governments, businesses and society at large must do everything they can to drive rapid and meaningful change.”
Globally, top performers across all indices this year are Microsoft, Apple, Landsec, Vodafone and Schneider Electric. The Information, Technology and Telecommunications (ITT) and Biopharmaceuticals industries are the notable sectors this year, in place of Utilities and Banking.