As the discussion around COP 26 switches the world’s focus from negotiation to action, new CDP research shows that companies currently disclosing targets will only contribute reductions of ~0.3 GtCO2e/a or 0.7% of total global emissions by 2030 (roughly equivalent emissions of Egypt or Spain), and only half are on course to do so. The move from negotiation to implementation isn’t just a COP slogan. It needs to be at the heart of the many pledges, initiatives, and agreements: it is time for action. That’s why CDP is developing a new tracker to help stakeholders assess whether the private sector is on track to a 1.5°C world or not. Accountability on progress is needed.
CDP has long functioned on the principle of encouraging change through disclosure and evaluating the quality of that disclosure via our scoring process. This means normalizing an idea by asking questions around it and embedding a new norm or standard over time through iteration. This triggers the tracking of critical metrics but also encourages corporate governance systems to manage and move those metrics in the right direction, i.e. moving from commitment to action. It ensures the best standards are implemented through our reporting mechanism on a global scale.
For most, the pathway to net-zero is a marathon, rather than a sprint; and tracking targets alone may leave many struggling to attain them. What the planet needs at this point is not a finish line but a way of tracking the pathways, supporting actors to attain their science-based targets, and holding them to account for progress.
From 2022, CDP will be working to focus its environmental disclosure platform – the largest in the world – on metrics that better assess the journey to a net-zero future. We will also use our platform to track climate action in a way that is accessible to all.
Tracking aggregated data to help companies and sectors improve
A clear presentation of data supports accountability. It facilitates the action of those doing well, it can help encourage those still struggling; and shines a light for those just starting, who are raring to go. The creation of a tracker robust enough to encourage accountability is a complex and iterative process. We are excited that in 2022 we will first set out our approach, with transparent methodology, and then launch our tracker later in 2022.
This move to accountability, tracking and assessment does not spring from an empty void. 2021 has provided ample incentive for setting environmental, science-based targets.
The IEA pathway to 2050 pointed at the systemic change required for such a pathway. The simultaneously startling and predictable 6th IPCC assessment report reviewed the science to show us why such a thorough transition is essential. Then came the several iterations of the UNFCCC secretariat synthesis report on Nationally Determined Contributions. The news there was shocking: a predicted increase of 16% emissions by 2030, in contrast to the 45% reduction we need.
Tracking the steps to meaningful climate action
How would we define ‘action’ and what precisely will CDP be tracking? There are steps companies must take on the way to attaining a target, and CDP will provide data to support companies on each step of the journey.
- The first step is measuring and disclosing the right impact metrics for an organization. At the heart of effective action is transparent data.
- Given the changing context by sector, location, and technology, of data needed, the next step is foreword indicators i.e planning arrangements. How do organizations plan to deal with the risk posed by climate (and later on, those associated with water and forests) and how are they moving from inventory- measuring past emissions, to planning for and controlling emissions.
- Disclosure and governance then need a direction and so the next step is to set a target.
- This is followed closely by setting a transition plan of how to arrive at that target.
- Finally, we arrive at the question of attainment of the plan – ultimately this is of course focused on outcomes – not just in terms of emissions performance but also in terms of new business models and product and services portfolios.
Each of these steps is characterized by a number of indicators. But setting aside such methodological complexity, we would like to ask: how much could entities – companies, cities, and regions – achieve in terms of emissions reductions, if their plans were met? And how many of those plans are they meeting?
Tracking the big picture - a live feed not a photograph
Tracking steps towards attaining emissions reduction targets are not, however, just about taking a snapshot of data and tracking. It is about using that data to create a continuous picture, across time, sector, and country. Accountability takes many forms and they should all be public and clear.
At today’s debrief of the impact of COP26 on business, we will release the first few insights – to show the potential impact of non-state actors across to the next COP. Here is a taste of where we are today, for corporate actors:
- Already 1,300 companies within the CDP disclosure system who are setting and achieving targets (and whose target attainment we were able to asses) have collectively reduced their emissions by around 0.5–0.8 GtCO2e cumulatively since 1990 (1-2% of global emissions today).
- If all the companies that have set targets for 2020 or later met them, they would reduce emissions by an additional 0.3 GtCO2e per year by 2030, compared with 2019, roughly equivalent to the annual emissions of Egypt or Spain.
- By 2050 the reductions would be 0.8–1.0 GtCO2e per year, equivalent to the emissions of Canada and the Philippines combined – or of the global aviation sector.
The above reductions represent a fraction of the emissions for which part of the corporate sector is responsible, around 3–4% of total global emissions, because they come from a comparatively small group of companies (~1,300). However, a larger group of companies (~1,800) are already disclosing and setting out targets. The companies in this larger group control twice the emissions above (5–6% of total global emissions), though few of their targets to date are grounded in pathways limiting warming to below 1.5°C.
Yet this larger group has a few other interesting things to show us about the way in which accountability (and accounting) are going. 47% of the companies within this group have targets that cover indirect emissions (scope 3 emissions). Additionally, both small and large companies are stepping up, with almost half of the FTSE100 and over a third of the S&P500 setting targets. 13% of global emissions are disclosed to CDP, but four out of five FTSE100 companies and two-thirds of S&P500 companies disclose their emissions.
We need more targets set and met – but it’s a good start
Compared to the size of the challenge facing us, these numbers are worrying. While the sum of disclosed emissions is equivalent to the emissions of the entire global agriculture sector, it is not nearly enough, and current emissions reduction achievements would fall far short of needs in both 2030 and 2050. But these numbers also indicate hope as they lie at the heart of CDP’s proven theory of change: numbers of companies disclosing have increased by 135% since 2015, with nearly 5,000 companies representing 13% of global emissions under corporate control*. This positive upward trend continues as this year CDP had over 13,000 companies disclose, and this was before commitments made at COP26.
In September CDP also unveiled its new five-year strategy, with a focus on transition planning. As always, our collected data also guides the way for companies wishing to take the next step. We will help push companies from their first step through the rest and use this data to track that movement.
By the end of 2022, we plan to be tracking transition planning as well as governance. With the whole gamut of climate action, from disclosure to attainment readily available and open to access, we will be able not only to gauge where we are and how we are getting there but also to affect that march.
This kind of accountability and transparency are not only key to CDP’s new strategy, but also vital in ensuring companies go further and faster and stick to their climate transition plans.
In coming blogs, we will focus on different elements of this tracking and the measures it takes to retain its relevance – from stakeholder engagement to data assessments.
*Of the 9,500 questionnaires received by CDP in the 2020 climate response round, 4,852 were taken forward for this analysis as their responses were sufficiently comprehensive and consistent for the analysis required.