.jpg)
An analysis of over 270 leading global companies across the most CO2-intensive industries found that only 25% have set CO2 reduction strategies that align by 2030 with either the International Energy Agency’s Sustainable Development Scenario or Net Zero by 2050 scenario, and only 40% plan to be net zero by at least 2050. While around 90% of these companies are reporting CO2 emissions data and 70% have set CO2 reduction targets, four out of the top five emitters – Huaneng Power, NTPC, China Petroleum & Chemical, and PetroChina – have yet to establish comprehensive carbon reduction targets, according to new, proprietary analysis by Bloomberg Intelligence (BI).
“Our data suggests that most companies have set goals, but only 25% align with a temperature-aligned benchmark by 2030, and only 40% plan to be net zero by at least 2050. The lack of ambition across the most CO2-intensive industries indicates a risk for investors and a major hurdle in efforts to address climate change”, said Eric Kane, Director of ESG Research, Americas, at Bloomberg Intelligence.
The report forecasts and compares emissions of companies in the airlines, chemicals, marine shipping, metals & mining, oil & gas, steel and utilities industries. It shows that total emissions will fall from over 5.7 billion metric tonnes in the latest year reported to 4.3 billion in 2030, and 1.2 billion in 2050, assuming emissions levels remain constant for those that have yet to set a target.
Eric Kane added: “While industry-specific benchmarks are applied in our BI Carbon scenario analysis, this overall trend indicates that many of the world's top emitters are not taking aggressive enough action to reduce CO2 emissions. This suggests a significant risk for investors, as many companies in the BI Carbon coverage are likely to face increased regulation and potential costs associated with their emissions.”
The analysis by Bloomberg Intelligence shows more than half of the utilities companies in the peer set have carbon neutral commitments. Danish power company, Ørsted, the industry's most ambitious, aims to have carbon neutral energy generation and operations by 2025. The company currently generates more than 80% of its energy from renewables and will phase out coal (7% of total generation) by 2023.
Airlines and oil & gas companies may face above average exposure to the rising costs of carbon offsets. Of the companies with stated carbon reduction strategies in BI’s Carbon dataset, 70% of airlines and nearly 65% of oil & gas companies indicate a reliance on offsets in their overall strategy. Alaska Air Group is among leaders on BI’s Carbon scores relative to peers, but over half of their airline peers have also set targets in-line with International Energy Agency’s Net Zero by 2050 (NZE) benchmark, which calls for a 40% reduction in the levels of CO2 per passenger kilometre by 2030 and 90% by 2050 vs 2019 levels.
Shell, which has one of the most ambitious carbon targets of any oil major, states that it will offset 120 million tonnes of scope 3 emissions through nature-based offsets. JetBlue offsets all of the CO2 emissions from jet fuel for its domestic self-operated flights. In 2019, the company's scope 1 emissions from jet fuel were just under 9 million metric tonnes.
“As the COP26 negotiations progress and carbon neutrality pledges continue to be made, our research highlights that 22 of 39 oil and gas companies have targets to be carbon neutral in their operations. Six of those 22 plan to be carbon neutral inclusive of the emissions generated from the use of their products. We expect an escalated focus on decarbonisation as firms look to differentiate themselves in their sectors,” added Eric Kane.
Figure 1: BI Carbon – Forecasted CO2 emissions reductions by industry
Source: Bloomberg Intelligence.
BI’s report concludes that only 26 out of 162 eligible companies in the BI Carbon universe have established Science Based Target Initiative (SBTi) aligned targets. The utilities sector is the one with the highest percentage of aligned targets, with companies including Iberdrola, Enel, and Ørsted establishing reduction plans.
The BI Carbon analysis and scores covers over 270 companies across the airlines, chemicals, marine shipping, metals & mining, oil & gas, steel and utilities industries. The analysis uses publicly stated CO2 reduction goals to forecast emissions out to the years 2030 and 2050, and to compare to industry-specific and temperature aligned benchmarks. The coverage universe will continue to expand to cover additional industries. The BI Carbon scores evaluate performance on five key components, recent reduction trend, current intensity, future reduction, future intensity, and distance from a temperature-aligned benchmark.
The full report ‘How BI Carbon Analysis and Scores Demystify the CO2 Transition’ is available to Bloomberg Terminal subscribers via {BI<GO>}.
