In regards to climate goals, a recent study shows that only 20 businesses analysed have adequate plans to transition through decarbonisation.
This study comes from the London School of Economics and Political Science’s (LSE’s) Transition Pathway Initiative Centre (TPI Centre). Released on the 7th of November (2023), the study shows the results gathered from 1,000 businesses regarding their transition through decarbonisation plans.
The companies that were studied fall within sectors that are considered to produce the most greenhouse gas emissions. This includes the oil and gas sector, the coal mining sector, and the steel sector.
Over one thousand companies were chosen to be a part of this study and analysis, however, only 20, which equates to roughly 1%, have plans in place to help them work towards reaching their decarbonisation goals.
This is worrying as the majority of the companies studied are classed as being large companies and have large amounts of capital. Meaning that they have money to successfully work towards their decarbonisation targets if they had sufficient plans in place that they worked towards.
Roughly 1% have plans in place to help them work towards
reaching their decarbonisation goals
The analysis also shows that only 52% of the companies studied have carried out climate scenario planning and only 48% have added both climate risks and opportunities into their strategies for the long-term.
There is, however, some positives as 98% have incorporated policies to mitigate the impact they have on climate change, and 84% are disclosing the information surrounding their emissions and the targets they have set to reduce these emissions through decarbonisation.
Professor Simon Dietz, the TPI Centre’s research lead and the Professor of Environmental Policy at the Grantham Research Institute on Climate Change and the Environment at the LSE, has stated that:
“These results show that, while companies’ management and governance of climate change have in many ways improved, they have yet to come up with the detailed, quantified and costed transition plans needed in this critical decade.”
These figures have not actually come as a shock to researchers, as a study carried out by not for profit organisation CDP, in February 2023, had similar results. The CDP’s study showed that less than 1% of the 18,600 companies studied were releasing information regarding their transition to net zero and the plans they had or were putting into place for decarbonisation.
Within the study, more than a third proved that they had sufficient information regarding climate risks and opportunities when considering their transition to net zero. The study showed that 24% had highly detailed information regarding governance structures that concerned the climate, and the effects of climate change.
Amir Sokolowski, the CDP’s Global Director of the Climate Change Team, claimed that:
“Whilst overall disclosure of credible climate transition plans is low it is encouraging to see more companies recognising the relevance of a climate transition plan and start their journey towards developing one…
The need for companies to develop a credible climate transition plan is not an additional element but an essential part of any future planning. Companies must evidence they are forward planning in order for us to avert the worst impacts of climate change and to send the correct signals to capital markets, that they will remain profitable.”
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