Picking up the pace

CDP’s second annual analysis in the ‘Tracking corporate action on climate change’ series shows that companies are stepping up their response to climate change, setting more ambitious targets to drive longer-term progress towards their low-carbon future.

CDP’s global analysis shows that business is picking up the pace on climate action. Spurred by the Paris Agreement, more leading companies are embedding low-carbon goals into their long-term future business plans. Among our sample of high-impact companies, 89% of respondents report emissions reductions targets in 2017. More than two thirds (68%) of those are setting targets to at least 2020, and 20% are mapping out sustainability actions to 2030 and beyond. This represents an increase across the board since our benchmark was set in 2016, when 85% of our sample reported setting targets, but only 55% extended these to 2020 or beyond – and even fewer (14%) went to 2030.

There is growing recognition that targets should be aligned with climate science to effectively future-proof corporate growth. Long-term targets, that are ambitious enough to meet the global effort to hold warming below 2 degrees Celsius, help companies to avoid investments in high-carbon infrastructure. They encourage business to move beyond incremental, business-as-usual emissions reductions, and think in terms of the new, low-carbon economic paradigm.

The number of companies in the sample that have committed to the Science Based Targets initiative has increased by 61% since 2016. This year, 151 companies (making up 14% of the overall sample, compared to 9% last year), are setting – or have commited to set – targets in line with the level of decarbonization required to keep the global temperature increase below 2 degrees. An additional 30% – 317 companies – aim to set a science-based target within two years.

This is an important shift for companies, from doing what they think they can easily manage, to stepping up to do what’s needed. This is responsible – and smart – business in the age of climate change.

And thanks to this rising ambition, our sample is getting ever closer to being on track for a climate-safe world. Achieving their current targets would take the companies in the sample 31% of the way to being in line with a 2 degrees Celsius compatible pathway by 2030; narrowing the gap from the 25% reported in 2016.

Find out which companies are in our sample and how they were chosen.

Since last year, there’s been a 20% increase in companies from our sample offering low-carbon products and services. From Nissan selling electric cars, to San Diego working with GE Current, AT&T and Intel to upgrade 25% of the city’s streetlamps to adaptive LEDs with data-collecting sensors - companies are capitalizing on the opportunities from the transition.

75% of companies in the sample now say their products and services help others to reduce emissions – whether it’s from selling greener products or providing low-energy buildings. That’s up from 64% last year.

More and more companies are embracing renewable energy. The number with a renewable energy consumption target has increased by 23% in the last year, with companies like BT and Unilever committed to sourcing 100% renewable energy by 2030 as part of the RE100 initiative. The number of companies with a renewable energy production target has increased by 36% since 2016.

One of the things driving this shift in energy procurement is carbon pricing. While carbon pricing at the national policy level is on the horizon or already underway in many places, a growing number of corporates, including AkzoNobel, are storming ahead and setting their own internal price on carbon. In the last year, the number of sample companies using internal carbon pricing has increased from 29% to 32% of the sample. As further proof of this positive momentum, another 18% of companies plan to implement a price on carbon in the next two years.

As explored in our recent 'Putting a price on carbon' report, this is a key lever for change. It internalises the hidden cost of carbon pollution, making it show up on the balance sheet. This corrects a key market failure and naturally drives climate action.

Collaboration between cities and corporates is key to driving the low carbon transition

San Diego’s Smart City initiative is the world’s largest smart city Internet-of-Things sensor platform. The city is working with GE Current, AT&T, Intel and others on the US$30 million project to install 3,200 sensors on street lamps across the city, generating a wealth of audio, video and environmental data. Those sensors are paid for with energy savings from converting 25% of San Diego’s outdoor street lighting to Adaptive Control LEDs.

Collaboration is not without its challenges, says Cody Hooven, the city’s chief sustainability officer. “But it’s very exciting – there’s huge potential to be innovative in government, and we’re trying to show that.”

Read the full San Diego case study

Read the full BT case study.

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