Developments and commentary in and around the ESG investment space.

MSCI
A measure of how much carbon dioxide is emitted by listed companies globally shows that they haven’t made progress since 2013, suggesting that international pacts to achieve “net zero” by mid-century haven’t yet galvanised sufficient change.

The world’s publicly listed companies must dramatically accelerate climate action if the 1.5°C warming target set out in the 2015 Paris Agreement is to be met, according to a new quarterly Net-Zero Tracker published by MSCI, the issuer of investment benchmarks and other data.

In Europe, for example, the European Commission wants to achieve net zero on carbon emissions by 2050, putting pressure on countries to shift away from fossil fuels towards renewable energy (and, more controversially in some cases, towards nuclear power). Reaching such a target while juggling goals of economic growth is likely to be a major political challenge in coming decades. 

MSCI said that its inaugural Net-Zero Tracker highlights how the annual emissions of listed companies globally are still at the same level as 2013. Firms collectively emit 10.9 gigatons of direct greenhouse gases every year, as of 31 May, MSCI said. 

“For the net-zero revolution to be successful it is critical for investors, companies, financial intermediaries and policymakers to come together to divert the world onto a path towards a sustainable future. Listed companies and other capital market participants have less than six years to meet that target,” Henry Fernandez, chairman and chief executive, MSCI, said.

The MSCI Net-Zero Tracker provides a quarterly gauge of climate change progress across a global universe of 9,300 publicly listed companies based on the MSCI All Country World Investable Market Index. The latest report shows that, among other findings, a number of publicly listed companies reported their indirect emissions for the first time, including, Airbus SE, Baidu, and British American Tobacco, but not all the disclosures are comprehensive. Westpac Banking Corporation and Booking Holdings, the operator of Booking.com, KAYAK and OpenTable, reported only a small proportion of their total direct and indirect emissions. The Procter & Gamble Company and ASML Holding reported additional scopes in the previous quarter, to now report all company emissions across most of the relevant categories. Coal India Limited was the largest emitter not to report any of its greenhouse gas emissions. 

Remy Briand, global head of ESG and climate at MSCI, said: “The data in our inaugural Net-Zero Tracker shows the need for a dramatic acceleration in action from the world’s public companies. For those not matching their commitments or lagging, there should be nowhere left to hide.”