EcoAct's FTSE Sustainability Reporting Research Warns Many UK Companies Lack Strategies to Reach Net Zero
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- 45% of FTSE are committed to Net Zero transition by 2050, but only 16% have a strategy to realistically meet the commitment.
- Top scoring companies include Unilever, BT, Landsec, SSE and NatWest Group.
- Investor pressure is having a significant impact on corporate sustainability reporting.
- Overall performance of index is pulled up by high performers exposing urgent action still needed by many UK companies.
London, September 23, 2020 – EcoAct, has today released the 10th edition of its Sustainability Reporting Performance of the FTSE 100. The report, which includes a leader board ranking the top 20 companies for environmental sustainability disclosure reveals that although an increasing number of companies are setting a Net Zero target, there is an absence of a clearly defined strategy for many.
Net Zero transition strategies need to be in place and implemented by 2030 with Net Zero target no later than 2050.
“Over the ten years we have undertaken this research, we’ve continued to see year-on-year improvements to climate-related reported best practice”, said Stuart Lemmon, CEO, Northern Europe, EcoAct. “Although we are encouraged to see an uplift in company commitments to Net Zero this year, if we are to succeed in this goal, it is imperative that commitments are backed by sound and achievable strategy.”
Scores allocated to the companies in the report range from 0% at their lowest to 92% at their best, demonstrating a highly disparate mix of sustainability performance and indicating that adequate climate-related reporting is still not a given in large companies.
Looking at overall sectors that made the report’s top 20, it is evident that banking, utilities and real estate have fared particularly well, with Barclays, NatWest Group, Lloyds, HSBC, SSE, United Utilities, and Centrica all appearing in the top 20, in addition to Landsec, British Land and Barrett Developments.
Unilever has defended its first place title for the second year running, having been a regular feature in the top 20 since 2013. BT has taken second place in the rankings, remaining in the top three for the 8th consecutive year.
Welcoming the news Andy Wales, Chief Digital Impact & Sustainability Officer at BT said: “At BT, we have pledged to become a net zero business by 2045 – long recognising the importance of setting ambitious science-based carbon reduction targets.
“We’re working with our customers, colleagues and suppliers to help them drive down their carbon emissions and it’s time for others to follow our lead by setting their own science-based targets and to become net zero by 2050. BT has pledged its support for a green recovery, but to truly build back better, the Government and business must work together to introduce policies that prioritise investment in green technologies and infrastructure – helping to create decent jobs and sustainable growth for the future.”
Key findings on sustainability reporting
Investors driving change
A key driver for best practice reporting is increased pressure from investors demanding better climate-related disclosures as set out by The Task Force on Climate-related Financial Disclosures (TCFD), led by former Governor of the Bank of England, Mark Carney. Alignment to TCFD has increased rapidly from only 15% of FTSE 100 companies in 2018 to 56% in 2020 as companies respond to investor demands for business climate risk assessments.
Science- based targets
Science Based Targets (SBTs) are ambitious emission reduction targets aligned to a decarbonisation pathway to limit global warming to 1.5°C or well below 2°C as advised by climate scientists. The report shows that that companies are more likely to be on track to meet carbon reduction targets if they set SBTs, but only 35% of FTSE 100 companies are currently doing so. despite the report showing.
Three quarters of FTSE 100 companies assessed in the research are calculating and disclosing their Scope 3 emissions – those indirect emissions occurring across a company’s value chain from sources not owned or controlled by the company. However, only 33% have a target to reduce them. Yet they play a crucial role in identifying the greatest sources of emissions involved in a company’s total operations and are key to a decarbonisation strategy. Success in meeting Net Zero is dependent on more companies demonstrating transparency and proactivity in Scope 3 reporting and exerting their influence to affect wider positive change.
While the report reveals that 81% of UK companies are assessing risks to their operations from climate change, only 64% are assessing them across their value chain. And only 56% have plans in place to mitigate those risks.
As a consequence of COVID-10, much of the world’s industry went into lockdown the second quarter of this year and we witness a significant drop in CO2 emissions as a result. Although it is too early to measure the impacts to corporate emissions in the research this year, it is estimated that overall emissions globally for 2020 will be down by 5-7%. However, EcoAct warns that with a shift to home working that needs to be accounted for, emissions reductions for businesses should not be assumed. Next year the research will be looking at how companies have disclosed the impacts of COVID-19 on their emissions and expecting the climate leaders to be improving their strategies for Net Zero.
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The report includes: the 2020 sustainability leader boards; the latest trends in corporate climate-related reporting; analysis of the high performing industries; and an overview of corporate responses to Net Zero.Download now