There has been a significant increase in the number of companies who are addressing the climate crisis, according to latest research from Schroders.
It’s Climate Progress Dashboard (CPD), assesses individual companies on the steps they have taken to address climate change. Over the past two years it has found a 60 per cent rise in the number of companies that fall into the top band. There are also fewer companies in the worst-performing band.
However the dashboard indicates there there will be a long-run temperature risk of 3.7 degree above pre-industrial level. This is above commitments set out in the Paris Agreement, although the figure recorded is down from the 3.8 per cent rise predicted in Autumn last year.
Schroders says that while this progress is incremental, the pressure on governments and companies globally to make net zero commitments and set science base targets has risen sharply, and it expects 2021 to be a year of decisive change.
The CPD shows 12 key indicators, all of which are either unchanged from the previous quarter or improving. Schroders says that sharply higher carbon prices the biggest driver of change.
However data from this Climate Progress Dashboard shows that just under one-fifth of the value of large, listed global companies have made commitments to decarbonisation in line with the goals laid out in the Paris Agreement.
Furthermore, under one-tenth of institutional assets are managed by asset managers with net zero ambitions. Schroders joined 29 other asset managers in the Net Zero Asset Management Initiative last December, reinforcing the firm’s commitment to achieving the goal of net zero greenhouse gas emissions by 2050 or sooner.
Launched in 2017, this dashboard provides Schroders analysts, fund managers and clients with an insight into the progress governments and industries across the world are making towards meeting the 2°C temperature rise limit set by the Paris Agreement in 2015.
Schroders’ Global Head of Sustainable Investments Andy Howard says: “While the headline state of progress may be disappointing, pressure is building and 2021 could prove the year of decisive change.
“In the run up to COP26, the stream of announcements from policy makers and companies is set to gather pace, adding details and actions to the ambitions and aspirations already released.
“To date, those announcement have focused more on long term targets than on shorter term policy action, but there are signs of tangible steps in many of those countries.
“Over the last few years the share of the world’s economic output generated under governments with net zero commitments has risen sharply, and around two-thirds of global GDP and emissions are generated in regions committed to decarbonisation.This is encouraging news, but in order to tackle climate change we need to go beyond longer term targets and also focus on smaller steps to reduce emissions across value chains in the short term.
“As an active asset manager that invests across the public and private markets globally, we have a fundamental responsibility and imperative to encourage companies to re-orientate their business models towards decarbonisation, and to lead by example with regards to our own business practices.
“Now is not the time to be complacent. We are in a pivotal moment, and whilst some progress is being made, we need an aggressive and coordinated approach across policy makers, corporates and investors.”
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