Banking

GIB Asset Management and CDP call for net zero 2030

In a new paper entitled Net-Zero and the Race to 2030, GIB AM and CDP said that emissions cuts by 2030 are “urgently required” to avoid exhausting the world’s CO2 budget and temperature rises over 1.5°C.

Despite companies pledging net zero, approximately 40% of companies with targets have yet to disclose how they plan to achieve them, leading to greenwashing fears and stakeholder confusion.

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The paper recommends businesses that have not yet pledged net zero to commit to science-based targets, while firms that have set targets must ensure they are submitting disclosures, ideally through CDP, to track their progress. Alongside this, organisations are also asked to publish credible transition plans which details how they will align with climate science recommendations.

Greater data transparency will also help investors judge who is the ‘best’ to allocate capital to and determine whether engagement strategies have been successful.

The paper argued that a ‘radical transformation’ is needed in the power and energy sectors to meet the substantial emissions reductions required. For investors, this means seizing the opportunities sustainability challenges present, which can be facilitated through a low-carbon intensive portfolio.

Katherine Garrett-Cox, CEO at GIB AM, said: “We are facing an unprecedented climate emergency and without urgent action, there is a clear risk of a tipping point being reached.

“While governments are setting the stage at COP26, they cannot achieve the needed transformation alone. The Race to Zero is really a race to 2030 and it is vital that we massively speed up action to cut real emissions in the next nine years.”

Financial emissions challenge

GIB AM and CDP also urge the financial sector to address the environmental performance disconnect between what is reported and actual impacts.

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Despite significant momentum in disclosing environmental data in 2020, financial emissions remain a challenge, with the climate impact of financial institutions’ investment and lending over 700 times greater than their direct impact on average, according to CDP research. Only 25% of institutions are reporting the emissions associated with their portfolios, while 49% are not analysing their portfolios’ impact on climate at all.

Paul Simpson, chief executive officer at CDP, said: “It is vital all companies commit to net-zero targets that are based on science and that they set transition plans to achieve them. What happens within the next five years is likely to determine whether net zero by 2050 is achievable.”

“Transition plans must include accredited science-based targets and set out actions companies will take to transition to a 1.5°C-aligned business model. This should include capital allocation plans and what governance the company has in place to ensure delivery.”

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