“Without a fundamental change in the global economy’s functioning, it is not clear how we can achieve a significant shift.” This report adds to the growing body of evidence indicating that the world is far from meeting its climate goals. Paradoxically, major polluters like Shell and BP are refocusing on fossil fuel production after a year of substantial profits fueled by soaring oil and gas prices.
The analysis conducted by ESG Book assigned “temperature scores” to companies based on publicly reported emission data and criteria such as emission reduction targets, aiming to assess their contribution to global climate objectives. The study encompassed companies with a market value of at least $10 billion in the United States, the United Kingdom, China, India, and the European Union. It accounted for both direct emissions from operations and indirect emissions resulting from the use of the companies’ products. This latter aspect is particularly crucial for oil and gas firms, as the majority of their emissions arise from the combustion of their products, such as gasoline and jet fuel.
The report reveals that the number of companies in the UK, India, and the EU with emission reduction targets aligned with the Paris Agreement has remained stagnant since 2018. In the United States and China, progress has been slightly better, albeit starting from a lower baseline. In the United States, the percentage of Paris-aligned companies has increased from 11% in 2018 to 20%. Similarly, in China, the figure has risen from 3% five years ago to 12%.
While it is encouraging that many companies are becoming more proactive, the data indicates that progress is not uniform across the board. According to Klier, a combination of stricter government policies, shifts in consumer behavior, and technological advancements will be necessary to bring about a significant change in the current trajectory of climate change. Institutional investors, including pension funds, also have a crucial role to play by redirecting capital towards renewable technologies.
There are promising signs of a growing flow of funds into renewables. The International Energy Agency predicts that investments in solar power will surpass those in oil production for the first time this year. In a report last month, the IEA’s executive director, Fatih Birol, stated that for every dollar invested in fossil fuels, approximately $1.7 is now being allocated to clean energy, marking a significant increase from the one-to-one ratio five years ago. However, it is projected that over $1 trillion will still be directed towards oil, gas, and coal this year, surpassing the level compatible with achieving net-zero emissions by 2050, as stated by the IEA.
The World Meteorological Organization reported in May that there is a 66% chance that the planet’s temperature will exceed the 1.5 degrees Celsius threshold for at least one year within the next five years. While this would be a temporary breach, it serves as a stark reminder of the accelerating pace of climate change, leading to rising sea levels, more frequent extreme weather events, and the irreversible loss of critical ecosystems.
