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No fossil fuel majors have Paris-aligned pledges despite big talk on climate, investor study reveals

Utilities did better in the assessment by the Transition Pathway Initiative

No major fossil fuel company has a credible Paris-aligned emissions target, according to research released today by investor group the Transition Pathway Initiative (TPI). 

The asset-owner led initiative, which is backed by 80 investors with $22trn in combined assets, assessed the ‘carbon performance’ of 59 of the largest listed oil & gas and coal energy companies. Although seven European companies (12%), including Glencore, Anglo American, Shell, Repsol, Total, Eni and Equinor, are on track to align with the  emissions pledges made by individual countries as part of the Paris Agreement, it is not enough to keep them in line with the overall objective of keeping the global temperature rise to below 2 degrees Celsius above pre-industrial levels. 

Shell, Total and Eni’s targets are approaching a 2°C pathway, but they still need further measures to be assessed to align with the benchmark, the study said.

“Investors have witnessed a flurry of significant climate announcements by fossil fuel majors this year, so it is striking this independent research still shows those commitments do not yet align with limiting climate change to 2°C,” said Adam Matthews, Director of Ethics and Engagement at the Church of England Pensions Board and co-chair of TPI. 

Utility companies fared better, according to the assessment. TPI assessed 66 firms in the sector, finding that 39 (59%) were aligned with the Paris pledges, while 22 (33%) were aligned with the most ambitious ‘below 2°C’ benchmark.  

Professor Simon Dietz, who authored the report, explained the divergence between the two sectors: “The electricity sector is heavily regulated with regards to its emissions in some regions, such as the EU, and this likely explains some of the results we see. More broadly, the technologies needed for decarbonising electricity production are already there and often competitive on cost with fossil fuels, so the core business model is not under threat.” 

“For oil & gas companies, the route to Paris alignment is much more of a challenge to their basic reason for being. Some companies have started grappling with this challenge, but none have met it yet.”

Across the board, energy companies showed little improvement when it came to their ‘management quality’ or governance of climate risks. Rated from Level 0 (Unaware) to Level 4 (Strategic Assessment), the average score for was 2.7 – just 0.1 higher than last year’s result. The research showed that 94% of energy companies now have a policy commitment to act on climate change, but fewer take more advanced steps. For example, just 9% of companies ensure consistency between their climate change policies and the  positions taken by lobbying groups of which they are a member.