Climate countdown: Listed companies are running out of time

A new report from MSCI tracks quarterly progress toward global climate goals.

The world’s publicly listed companies will blow through a key global temperature threshold in less than six years if their carbon emissions continue at their current rate, endangering efforts to prevent the worst effects of climate change, a new report from MSCI shows.  

The more than 9,200 companies in the MSCI All Country Investable Market Index emit nearly 11 billion tons of greenhouse gases annually, leaving five years, eight months before they deplete their share of the global emissions budget for slowing warming to 1.5 degree Celsius (1.5°C) this century, according to MSCI’s Net Zero Tracker.

Investors can use the report to monitor whether listed companies have credible plans to reduce their carbon footprint and track the alignment of their own portfolios with the Paris Agreement, which set a goal of keeping global warming well below 2°C, preferably no more than 1.5°C, by the end of the century. To achieve it, the world would need to drive human-caused greenhouse gas emissions down to net-zero by around 2050.

The Net-Zero Tracker, which MSCI plans to publish quarterly, highlights how listed companies’ collective carbon footprint has remained roughly unchanged since 2013 notwithstanding the Paris Agreement and a push by countries across the world to put climate change at the top of the global agenda.

“The data in our inaugural tracker shows the need for a dramatic acceleration in action from the world’s companies,” says Remy Briand, MSCI’s head of ESG.

Leaders and laggards

The MSCI Net-Zero Tracker lists the 15 largest companies by market value that improved their emissions reporting in the year that ended May 31, 2021. Even among companies that improved their reporting, gaps remain between the share of emissions reported and what MSCI estimates their emissions to be. The tracker also shows the 10 largest emitters of greenhouse gases that had yet to report any of their emissions.

Briand says that investors are counting on the COP26 climate summit this November to call for regulators in every country to mandate climate-related disclosures and agree on international standards of disclosure. “For companies not matching their commitments or lagging, there should be nowhere left to hide,” he says.