TPI Warns Against Transition Laggards

    Stockholm (NordSIP) – A new report by the Transition Pathways Initiative (TPI) shows energy companies are making alarmingly slow progress in their transition to a low carbon economy.

    The report covers 135 companies involved in coal mining, electricity and oil and gas production. According to the TPI only four energy companies – oil and gas producer Targa Resources and coal miners Adaro Energy, Shaugang Fushan Resources and Washington H. Soul Pattinson – are “unaware of or not acknowledging climate change as a business issue”. Coal mining currently has the lowest average Management Quality of all sectors in the TPI database.

    TPI’s report notes that four 4* companies satisfy all 19 Management Quality criteria that are applicable. Equinor and Suncor Energy in the oil and gas sector, BHP Billiton in coal mining and E.ON in electricity production are the top managers.

    Close to 60% of energy companies are on Level 3 – integrating climate change into operational decision-making – or Level 4 – strategic assessment of climate change. However, the report is gloomy. “On aggregate, energy companies’ Management Quality has hardly improved since last year. Further analysis indicates that there has been progress amongst the largest companies, but that too few companies have moved up from last year, and the new small- and mid-cap. companies that have been added to the database tend to have lower Management Quality.”

    On the Carbon performance front, the picture is even worst. “Only 28% are aligned with one or more of the Paris Agreement benchmarks, and only 12% will be aligned with the most ambitious Below 2°C benchmark.”

    Adam Matthews, Co-Chair of TPI and Director of Ethics & Engagement at the Church of England Pensions Board, noted that “only two oil and gas companies have aligned themselves with the lower end of the Paris Agreement (Shell & Repsol). The remainder of the sector is woefully behind when contrasted with the electricity sector where you see emerging alignment to both below 2 degrees and 2 degrees,” he added. “For any investor in Climate Action 100 or holding these companies, it is a serious wakeup call if we are to see these companies align.”

    Electricity is the best-performing sector in the TPI database on Carbon Performance. Almost half of the companies are or will soon be aligned with the Paris Agreement’s 2030 GHG emissions targets according to the report.

    Image by Monica Volpin from Pixabay

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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