Companies must set climate targets in line with science – executives
LONDON (Reuters) – Companies must listen to scientists and align their plans to reach net zero targets with a global pact to fight climate change, executives told a Reuters Next conference on Monday.
Under the 2015 Paris Agreement, countries agreed to take steps to limit global warming to well below 2 degrees Celsius, and preferably to 1.5C, compared with pre-industrial levels.
But time is running out and scientists have delivered stark warnings that society as a whole needs rapid and unprecedented change to curb global warming and avoid catastrophic climate change.
“Governments and companies need to be thinking about what the scientists are telling us. COVID-19 teaches us that,” said Sean Kidney, Chief Executive Officer, Climate Bonds Initiative.
“Look at the mess made in Britain and the United States from not listening to scientists. That is what climate change is shaping up to be and it’s a huge disaster.”
Some companies have set their own targets for net zero carbon emissions, but they differ in terms of what is included and can be difficult for investors to measure progress.
“Setting a 2050 net zero target is easy for a chief executive to do when they know they will be gone by the time it becomes clear whether or not the company has met that target,” said Nick Stansbury, head of climate solutions, Legal & General Investment Management.
“For investors, it is key that near returns are demonstrably aligned with net zero targets with well-costed plans on how to get them and clear measures so we can track progress in the near term.”
PRICE ON CARBON
Europe’s top oil and gas companies, which account for roughly 7% of global crude consumption, have committed to targets that vary in scope and detail, making them hard for investors to compare.
Last year, Shell set a next zero emission target by 2050 or sooner. The Anglo-Dutch company previously had long-term intensity based targets, rather than goals based on absolute emissions reductions.
“A big change over the last few years is (factoring) the risk of the broader carbon footprint of companies,” said David Hone, chief climate change advisor at Shell.
“When you fill a car with petrol (from a Shell garage) they are Shell emissions and that is included in our footprint.”
Shell aims to cut the carbon emission footprint from the energy products its sells, an intensity-based measure, by around 65% by 2050, and by around 30% by 2035.
At least $1 trillion a year of capital was needed to finance the low-carbon transition and the most powerful tool to enable that was a clear and science-based price on carbon and all greenhouse gas emissions, Kidney said.
Although that has been hard to achieve at a global level, regional carbon markets can play a role in incentivising companies to invest in low or zero carbon technologies and move away from fossil fuels.
(For more coverage from the Reuters Next conference please click here here)
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