On the go: Fewer than one in five transport companies are on track to limit climate change to 2C, according to the Transition Pathway Initiative, as the imperative for asset owners to take action intensifies.
Out of 22 airline companies and 22 car companies, only Wizz Air, Tesla and Daimler are aligned with a 2C pathway.
But the TPI report shows the car sector is ameliorating, with 40 per cent of car manufacturers improving climate management this year and average fleet emissions intensity falling at up to 2.5 per cent. Nine automotive manufacturers are now projected to align with the Paris accord on climate change by 2030.
Nine of the 21 car companies for which TPI has trend data also improved their climate management quality score this year.
The group said: “The sector performs very well on incorporating climate change into executive remuneration (59 per cent), and on disclosing emissions from use of their products they sell (77 per cent).”
The airline sector’s carbon performance remains the second worst in the TPI database, ahead of only oil and gas in terms of alignment with the Paris benchmarks.
Almost 60 per cent of the 22 airlines assessed have emissions-reduction targets that align with the Paris pledges in 2020. However, beyond that most airline targets are based on net emissions including offsetting, and only easyJet and Wizz Air are aligned with any of the 2030 benchmarks.
The TPI said offsetting is not a credible solution to the climate crisis, which requires more drastic cuts to emissions in order to preserve our planet and the value of assets in the sector.
Greenwashing is mis-selling
Pension funds are increasingly proactive in changing corporate practices, as Faith Ward, co-chair of TPI on behalf of the Environment Agency Pension Fund, part of the Brunel Pension Partnership, explained: “We can use the information arising from our infrastructure and private equity investments, which have a strong focus on financing the transition to a low-carbon economy, to challenge the listed automotive companies’ business strategy assumptions, or indeed the asset managers investment case based on the same outlook.”
Nevertheless, Ms Ward pointed out: “An increasing number of investors are setting below 2C targets, and thus seeking to allocate to companies that do the same. Investors have been most effective at changing company behaviour when working collaboratively within a consistent set of requirements.”
One danger is that asset managers engage in virtue-signalling, known as greenwashing.
Ms Ward said: “Greenwashing is prevalent and at its worst could be considered plain mis-selling. Greenwashing is dangerous and disingenuous to those trying to invest in a way that won’t further catastrophic climate change.”
She said input from politicians and regulators would be vital, but added: “The wider industry needs fundamental change in just about every aspect of how we allocate, manage and monitor our investments – and engagement by the asset owner community is vital to this.”
