Listed companies are on course to generate enough emissions to breach the limit that would keep the global temperature rise below 1.5°C by April 2026, MSCI Sustainability Institute has warned.
Public listed companies are now projected to emit 11 per cent more “Scope 1” – greenhouse gas emissions in 2023 than they did in 2022. MSCI says that emission need to fall by 43 per cent over this decade to limit the temperature rise to 1.5°C.
The MSCI Net-Zero Tracker says the decarbonisation progress is slowing amongst listed companies and the breach of the 1.5°C threshold is now set to happen three months earlier than MSCI projected in July 2023.
But the decarbonisation rate of national governments is projected to accelerate.
Governments in 13 of the G20 nations are set to significantly increase their pace of decarbonisation this decade, rising to an average 4.5 per cent a year from only 0.8 per cent in the five years after the Paris Agreement.
Among the G20, nine countries will see falls in their listed companies’ decarbonisation rates in the coming years.
MSCI published the findings ahead of the COP28 climate change conference in Dubai.
The increase in emission by listed companies comes “despite meaningful steps by the listed sector to decarbonise that have seen the warming associated with their emissions drop by half a degree in two years”, from a projected 3°C in October 2021, to 2.5°C, based on MSCI’s ‘Implied Temperature Rise’ metric, the firm said.
In addition, more than a third (34 per cent) have set a climate target that aspires to reach net-zero, a 50 per cent increase from two years earlier.
Linda-Eling Lee, head of the MSCI Sustainability Institute, said: “Despite progress, the world has not moved the needle enough to be on track to achieve 1.5°C.
“Following a strong start, progress from listed companies in the remainder of the decade is set to slow now that the low hanging fruit has been picked. This makes it imperative to focus on policy innovation and technological advancements to help limit the cost of low-carbon energy.”