FTSE 100 stagnant on climate change action since 2015

FTSE 100 stagnant on climate change action since 2015
  The impact of a drought in Aceredo, Spain in February

The FTSE 100 has not improved its contributions to limiting global warming since 2015, according to a study released alongside a UN report warning that climate change is worse than originally feared.

When the Paris Agreement was signed seven years ago, 21 per cent of FTSE 100 companies were aligned with the aim of reducing global warming by 1.5 degrees by 2050.

This remains at 21 per cent, said ESG Book, a corporate sustainability information provider developed by Arabesque.

Its analysis showed there were improvements in the disclosures companies made around climate impact, with rises in the proportion of groups disclosing at least scope one and two emissions.

The majority of FTSE 100 companies are on track to reduce global warming to 2 degrees by 2050, ESG Book said, with the proportion nearly doubling from 23 per cent to 47 per cent between 2015 and 2021.

This is higher than the S&P 500, which saw 14 per cent in 2015 and 31 per cent in 2021.

However, there are now fewer companies in the Dax 40 that are on track to meet the 1.5 degree goal in 2021 than in 2015, dropping one percentage point to 28 per cent.

Daniel Klier, president of Arabesque, said these climate commitments “will no longer cut it” and the world’s biggest companies will now be judged by their actions.

He said: “Improvements in disclosures since 2015, and in overall climate impact, are promising. But with emissions needing to be reduced by 45 per cent by 2030, we’re falling short of the drastic action needed to build a sustainable world economy.”

This challenge cannot be met by placing the entire burden on a few pure-green innovators, he added, saying all willing participants should be supported – green, brown, and everything in between – to make the transition.

“Only a combined effort will change the economy, and through technology and data we can provide markets with the signals required to identify and allocate capital to those companies who are genuinely playing their part.”

IPCC report

The news came after the intergovernmental panel on climate change warned the risk of climate change is much worse than initially thought.

The UN report, which has been signed off by 270 from 67 countries, warned that there is a “brief and rapidly closing” window in which the world can adapt to climate change. 

The report identified a funding shortfall, with 80 per cent of money directed to limiting climate change going towards mitigation and the other 20 per cent towards adaption.

Mitigation includes the actions and programmes set up to lower carbon and other greenhouse gas emissions, and adaption is the measures taken to protect society from the impact of the climate change that has already taken place.

The report also warned against “maladaption”, which refers to actions with the (often unintended) consequence of increased greenhouse gas emissions.

Nick Lyth, president of Green Angel Syndicate, a network of specialist investors fighting climate change, called the report “chilling”.

“This is a clarion call for help, for all of us to find the technologies that are going to innovate and change the way we all access the requirements for our own lives, and more particularly the requirements for those in the worst-threatened regions of the world,” he added.