2022 marks the 12th edition of EcoAct’s annual Corporate Climate Reporting Performance research. This year’s findings follow a year of extreme weather events, a global energy crisis and the publication of three IPCC reports highlighting the consequences of a warming planet.
This summer, much of Europe experienced record-breaking temperatures that led to wildfires, droughts and heatwaves. Pakistan has been affected by deadly flooding throughout much of the country, and record-breaking hurricanes have seen millions without power throughout the Caribbean. These extreme weather events are increasing in frequency and severity as a result of global warming. Urgent action is needed to help slow down climate change and prevent its catastrophic impacts.
The need for rapid and urgent climate action has been well acknowledged by the Intergovernmental Panel on Climate Change (IPCC). Its recent publication of three of its Sixth Assessment reports clearly demonstrate that climate change is real, the consequences of a warming planet are already here, and many of these are irreversible.
While we are facing significant challenges as a result of climate change, the past year has seen some progress on the international governance of climate change. Since the publication of our last report in 2021, we have seen world leaders come together to sign the Glasgow Climate Pact, strengthening the landmark Paris Agreement of 2015. The Science-Based Targets initiative launched the new Net-Zero Standard, giving corporations a clear blueprint for net-zero target setting. In the coming months we will once again see world leaders gather together at COP27 and the UN Biodiversity Conference COP15.
The next few years are critical in the global fight against climate change. Keeping the goal of 1.5oC alive falls heavily on the corporate world to take the lead with ambitious commitments and action.
This is our 12th year researching the climate reporting performance of some of the world’s largest publicly traded companies. Our research identifies best practice and evaluates how companies are disclosing their progress towards the global goal of net-zero.
In response to the global need to act on climate change, this year we have broadened our research scope to include the twenty largest companies by marketing capitalisation from following indices: CAC, DAX, DOW, FTSE, FTSE MIB, IBEX. In total, 119 companies across 27 sectors have been reviewed across these indices, and all companies have been scored and evaluated against 26 different criteria. This refined focus has allowed us to shine light on some of the most influential companies across the Western economy and examine how they are addressing climate change.
Our research is based primarily upon publicly available data and supplemented with data from CDP submissions where necessary. This ensures a comprehensive overview of corporate progress towards net-zero.
In addition to broadening the scope of our research, this year the research methodology has been updated to focus on net-zero target setting and the achievement of corporations against their climate targets. This adjustment is necessary to ensure our research is aligned to the latest science. As with previous research reports, corporations are assessed around four key categories:
This year, we have developed the methodology to favour corporations to actively making progress towards their net-zero targets and climate commitments, as we work to reduce global greenhouse gas emissions by 43% by 2030.
A sector-specific weighting has been used to ensure that companies only earn the highest available points if they address all relevant emissions categories for their sector. Other areas of best practice, including Scope 3, climate risk, emissions reductions and voluntary carbon offsetting, are also analysed within this year’s research.
Over the past 11 years of research, we have seen a positive progression in climate commitments and reporting from corporations. In particular, we have seen positive trends in net-zero target setting, TCFD-aligned reporting, and science-based targets.
Last year we saw the number of corporations setting net-zero targets increase by 40% on the previous year. While commitments have massively increased over the past 11 years, our research has highlighted that the international corporate community was lacking clarity and guidance on transitioning to net-zero. This year will be the first report following the SBTi’s new Net-Zero Standard. With a clear blue-print for net-zero target setting, this year we will expect to see some progress in actionable plans towards a net-zero transition.
Over the past several years, the recommendations from the Taskforce for Climate-related Financial Disclosure (TCFD) have driven the number of companies measuring and reporting their emissions and displaying good governance over climate-related risks and opportunities. In 2022 TCFD-aligned reporting became mandatory under UK law for over 1,300 of the largest UK-registered companies. This year we will examine whether the following strategic elements have been put in place: governance dedicated to climate issues, initiatives encouraging behavioural change, and a system for assessing risks (physical and/or transition) and opportunities related to climate change.
Science-based targets (SBTs) are targets that outline a clearly defined pathway for emissions reductions that align to the latest science, necessary to meet the Paris Agreement. Last year we saw 65% of analysed companies with an SBT, a 26% increase on the previous year. Over recent years we’ve seen a steady increase on the number of companies setting science-based targets and we expect this to rise again this year.
It is no longer enough for corporations to make climate commitments without robust actionable plans to support these. Strategy urgently needs to turn into real world achievement. Last year we found that 74% of companies reduced scope 1&2 emissions in-line with a 1.5oC trajectory. This was positive to see, however was influenced by the COVID-19 pandemic impacting global operations. This year we will see how the bounce-back from the pandemic will influence these scores. Ultimately, we need to see corporations sustaining these reductions and going further to reduce emissions across all scopes.
We need to reduce global greenhouse gas emissions by almost half by the end of the decade if we are to limit global warming to 1.5oC. While businesses currently face numerous challenges, including a global energy crisis and impending recession, we cannot afford to loosen the grip on the transition to net-zero. Immediate and deep emissions cuts are required across all sectors and action is needed now. This year’s report will tell us whether the international corporate community are doing enough to help tackle climate change or whether more needs to be done.
Join us on the 24th October 3pm BST to find out who comes out top in our 2022 leader board.
This year’s report highlights companies leading the way on climate reporting and performance. We are proud to announce that this is our first edition of the report as EcoAct, an Atos company.
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