Plenary Session: Private Sector’s Responsibility for Achieving Carbon Neutrality
Assessing corporate climate governance & alignment
Antonina Scheer, researcher at the Transition Pathway Initiative (TPI)
The role of finance in climate action
• Climate risk
• Physical risk: climate change impacts
• Transition risk: stronger regulations, litigation against polluters, reputation risk
• Finance as a driver of climate action
• Capital allocation
• Shareholder engagement
Photo by Chris LeBoutillier on Unsplash
What is TPI?
• A global investor-led initiative established in 2017
• Open-access online tool• 401 companies in 16 sectors
• Assesses companies’ progress on the low-carbon transition• Disclosure-based
• 110 supporters with $30 trillion in assets under management and advice
How TPI assesses companies
• Two components:
1. Management Quality covers companies’ governance of emissions the low-carbon transition
2. Carbon Performance involves benchmarking companies’ emissions pathways against Paris-aligned benchmarks
Photo by Quinten de Graaf on Unsplash
Management QualityLevel 0
Unaware
Level 1
Awareness
Level 2
Building capacity
Level 3
Integrating into operational decision making
Level 4
Strategic assessment
Company has set long-term quantitative targets (>5 years) for reducing its GHG emissions
Company has nominated a board member/committee with explicit responsibility for oversight of the climate change policy
Company has incorporated climate change performance into executive remuneration
Company has set quantitative targets for reducing its GHG emissions
Company has incorporated climate change risks and opportunities in its strategy
Company has set GHG emission reduction targets
Company reports on its Scope 3 GHG emissions
Company undertakes climate scenario planning
Company recognises climate change as a relevant risk/opportunity for the business
Company has published info. on its operational GHG emissions
Company has had its operational GHG emissions data verified
Company discloses an internal carbon price
Company does not recognise climate change as a significant issue for the business
Company has a policy (or equivalent) commitment to action on climate change
Company supports domestic & internationalefforts to mitigate climate change
Company ensures consistency between its climate change policy and position of trade associations of which it is a member
Company discloses membership and involvement in trade associations engaged on climate
Company has a process to manage climate-related risks
Company discloses Scope 3 GHG emissions from use of sold products (selected sectors only)
TPI’s Management Quality framework includes 19 indicators that test whether a company has implemented a particular carbon management practice. The data are provided by FTSE Russell.
Carbon Performance
• Compare historical and targeted company emissions intensities with sector-specific benchmarks
• Sectoral Decarbonization Approach
• Data from the International Energy Agency
• Forthcoming updated benchmarks:1. National Pledges
2. Below 2 Degrees
3. 1.5 Degrees
Youth perspective• Generation Climate at New York Times COP26
Climate Hub
• Emphasis on climate justice
• Greater burden on developed nations
• Younger generations are demanding more of
companies as:
• Activists
• Voters
• Litigants
• Investors
• Employees
• Consumers
Photo by Markus Spiske on Unsplash
