Non-profit’s research shows around 4,000 firms worldwide have established credible climate goals verified by the Science-Based Targets initiative

Only a third of major companies worldwide have established credible climate goals validated by the Science-Based Targets initiative (SBTi), prompting calls for shareholders to use the upcoming AGM season to increase pressure on boards to beef-up their net zero transition plans.

Analysis today of over 13,000 companies which disclosed their climate and environmental data to CDP last year found just over 4,000 were developing a plan to transition their businesses towards a net zero future, despite the ever louder calls from leading corporates for economies to accelerate climate action following the COP26 Climate Summit last November.

Moreover, of all the companies reporting to CDP – which taken together boast a global market capitalisation of around $64tr – just one per cent disclosed their climate goals and data in line with all 24 indicators set out in the investor-backed non-profit’s recommended guidelines.

These guidelines align with frameworks such as those set out by the Taskforce on Climate-related Financial Disclosures (TCFD) on climate and transition risks, CDP said.

Nicolette Bartlett, chief impact officer at CDP, said the current proportion of companies developing a low carbon transition plan, which stands at only 35 per cent, “does not match the appetite from investors, customers, employees and governments who are pushing for more scrutiny post-COP26”.

“Critically, these plans also need to be assessed to ensure they meet stakeholder expectations and are actually delivering against climate needs,” she added. “Are they science-based? Are they effectively tracked in a manner that would allow stakeholders to assess progress? How do they compare to the progress of their peers? All of these enable a vital accountability mechanism.”

A report released today examining the disclosures of the 13,000 firms as to whether they include robust climate transition plans reveals the worst performing sectors are transportation and apparel, where less than 0.3 per cent of firms disclosed against CDP’s 24 key indicators.

Financial services, power, and fossil fuels sectors tended to demonstrate the highest rates of transition plan disclosure, perhaps due to the higher level of public climate scrutiny these industries face, although still only five per cent in each sector publicly reported on their plans, CDP said.

The report also provides details on investment trends, with 45 per cent of firms disclosing all details of their low carbon investments, with power and infrastructure sectors performing even higher, at 66 per cent and 59 per cent of firms, respectively.

CDP said the overall number of companies with credible climate transition plans in place had increased from 2020, but that its latest findings showed firms still had a long way to go if they are ever to be compliant with the pathways set out by the Paris Agreement.

Want to find out more about how the net zero transition will impact your business? You can now sign up to attend the virtual Net Zero Finance Summit, which will take place live and interactive on Tuesday 29 March and will be available on demand for delegates after the event.

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