The Global Compact has collaborated with CDP, an international non-profit organization, on behalf of the Science Based Targets (SBTi) initiative, an organization that supports companies in defining ambitious emission reduction targets.
In December 2015, more than 190 signatories in Paris agreed to limit the global average temperature rise to well below 2 ° C (3.6 ° F) above pre-industrial levels, in the hopes of keeping it as close as possible. at 1.5 ° C. C (2.7 ° F).
Shortly before the UK G7 Summit, which kicks off on Friday, the Take the temperature The report shows that the indices on the major stock exchanges of the G7 countries are averaging 2.95 ° C, while four of the seven are on temperature paths of 3 ° C or higher, well above the Paris benchmark.
Stock indices are made up of the most significant companies listed on a country’s largest stock exchange and are key reference points for understanding market trends and direction.
Delivery in Paris
As the economies of the G7 cover nearly 40% of the global economy and around 25% of global greenhouse gas emissions, the companies that make up the G7 have a responsibility to reduce their emissions. second SBTi.
G7 companies have the potential to cause a “domino effect” of positive change across the broader global economy – Lila Karbassi, UN Global Compact
“G7 companies have the potential to cause a ‘domino effect’ of positive change across the broader global economy,” She said Lila Karbassi, head of programs, UN Global Compact and chairman of SBTi’s board of directors, calls on the largest listed companies in the G7 to urgently step up climate action.
Investing in the planet
Currently 70% of the Canadian SPTSX 60 index stands at a temperature of 3.1 ° C and almost 50% of the Italian FTSE MIB at 2.7 ° C.
While passive investing currently accounts for around 40% of US funds and 20% of European funds, investors are cautioned that only 19% of companies listed in the G7 indices have climate targets allied with Paris Agreement.
G7 ministers responsible for climate and environment recently urged businesses and investors to align their portfolios with the Paris targets and set science-based net zero emissions targets by 2050 at the latest.
“This report highlights the urgent need for markets and investors to achieve the goals of the Paris Agreement … Governments must go further to incentivize the setting of ambitious science-based goals,” said Ms Karbassi.
Room for optimism
Despite these findings, however, the momentum for action in the G7 countries is growing, with the analysis citing 2020 as a key year for climate commitments.
About 64% of all corporate greenhouse gas reduction targets communicated to CDP last year were set by companies based in the G7 countries, and the annual science-based target rate doubled in 2020 compared to 2015- 2019.
The report also identified four urgent priorities for climate action.
He recommended that businesses and governments work together to leverage a positive feedback loop in which private actions and government policies are mutually reinforcing.
Second, companies need to work with suppliers to decarbonise supply chains.
Third, it asks investors to incorporate science-based goals into sustainability-related bonds and climate finance standards.
Finally, the report advised financial institutions to set science-based goals at the portfolio level with underlying assets to create a domino effect across all sectors of the economy.