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ACSI warns corporate carbon commitments are falling short

By Keith Ford
3 minute read

Australia’s largest companies need to do more if Australia is going to reach its Paris Agreement goals, the Australian Council of Superannuation Investors (ACSI) says.

An ACSI report released on Friday, Chasing 1.5°C: The ASX 200 – on the right trajectory?, found that corporate Australia is currently falling behind on its goal to help limit warming to 1.5 degrees, with current emissions reduction commitments seeing a 36 per cent overspend of the ASX 200’s “carbon budget” between 2021 and 2050. 

The report added that there is a lack of “concrete and measurable short and medium-term emissions reduction milestones”, even though there are many net zero pledges from listed companies.

“Climate change risks — financial and physical — exist right across the economy. They influence, and will continue to influence, the value of ACSI members’ investments and the retirement outcomes of their beneficiaries,” says ACSI CEO Louise Davidson.

“While we welcome the growing number of net zero ambitions from the ASX 200, ambitions must be made more credible by accounting for all emissions and implementing measurable short and medium-term reductions targets. If we are to meet the 1.5°C target companies cannot leave cutting emissions to the eve of 2050.”

The new research, supported by Climateworks Centre, looked at the climate commitments of 187 companies in the ASX 200. Climateworks Centre found that, while there is a growing corporate ambition towards 1.5°C-aligned net zero targets, ASX 200 target-setting and the overall trajectory are not in line with 1.5 degrees.

“While further climate change is inevitable, decisions made in the next months and years will determine its rate and magnitude. This trajectory, good or bad, will be largely dependent on the pathways adopted now,” Ms Davidson said.

The ACSI report also found that 45 per cent of companies have set net zero targets, with 73 per cent of these companies aligning these targets to the 1.5-degree trajectory. However, only 9 per cent of companies have 1.5-degree-aligned net zero targets covering all applicable emissions scopes and 48 per cent of companies have not set any absolute emissions reduction targets.

In July, the ACSI found that 103 companies have either fully or partially aligned their climate disclosures to the Task Force on Climate-related Financial Disclosures (TCFD), compared with just 11 in 2017 when the framework was first introduced.

“Those in highly exposed industries, in particular, have high levels of TCFD adoption, and the index seems on track for two-thirds of companies to adopt TCFD. ACSI believes it’s time TCFD became mandatory for all materially exposed listed companies,” said Ms Davidson.

“This jump in reporting puts Australian companies in good stead as global markets move to mandatory climate reporting.”

This followed ASIC’s warning that proposed global sustainability disclosure standards from the International Sustainability Standards Board, building on the existing Task Force on Climate-Related Financial Disclosures framework, would “inevitably” have an effect on local markets if adopted.