University of Queensland, Oxford and Princeton researchers have developed a "test" to measure if businesses are on track to meet Paris Agreement climate action goals, and so far the results are not promising.
The study, led by UQ Business School's Assistant Professor Saphira Rekker, has found 10 global cement companies and nine Australian utility companies were not complying with Paris Agreement targets to tackle climate change.
"After developing a new modelling framework, we analysed a total of 20 companies, and we found only one Australian electric company was compliant with the goals of the 2015 Paris Agreement," Dr Rekker said.
"These results are alarming and show the stark reality of how businesses continue to operate without a clear plan for decarbonisation.
"It also highlights how much change is still required if the world is to comply with the Paris Agreement goals."
The team measured the businesses' carbon reduction performance and alignment with the Paris Agreement, which is an international treaty on climate change with a global goal to limit global warming to well below 2℃ above pre-industrial levels.
"Stakeholders and investors want to know about their business's climate impacts, and we need to have an accurate way of tracking progress, otherwise the globe will fail to meet carbon budgets," Dr Rekker said.
"We also found there were a lot of discrepancies with previous business modelling, such as not requiring companies to outline a stringent below 2℃ decarbonisation pathway, and not providing a consistent starting point.
"That's why we developed the new framework, called Paris Compliant Pathways (PCP), to improve transparency."
The analysis of 20 businesses found Australian business Engie Group was the only company 'on track', having retired all its coal-fired assets at the start of 2017 with a commitment to retire its remaining gas plants by 2037.
Dr Matthew Ives from Oxford University said the findings are a landmark moment in the quest to bring accountability to the Paris Agreement goals.
"The Paris Compliant Pathways framework we developed allows companies, investors, and other stakeholders to strictly evaluate companies' performance against the goals of the Paris Agreement," Dr Ives said.
"Ensuring companies are aligned with their Paris Compliant Pathways is important for everyone, as we are already experiencing the devastating impacts of climate change, but it's also very important for companies and investors who need to know their exposure to transition and litigation risk and the devaluation of a company's assets."
Dr Chris Greig from Princeton University's Andlinger Center for Energy and the Environment said the PCP framework created a new benchmark for carbon emissions transparency.
"Delving into publicly available reports, the analysis reveals the large gap between the ambitious pledges being made by many companies and their actual operations, but also that there is often insufficient data to verify alignment," Dr Greig said.
"By partnering with more companies and financial institutions, we hope that we can expand our coverage and improve the ability to track alignment with the Paris goals."
In a follow-up study in partnership with Norges Bank Investment Management, the researchers also examined emissions data from 25 steel production companies and discovered most of the enterprises had by 2019 already emitted more than their entire carbon budget allowance under a Paris-compliant pathway.
The study is published in Nature Communications.
Video footage is available here.
