More public companies are making climate commitments but deadline to limit warming to 1.5°C shrinks

The number of global public companies making climate commitments has steadily grown this year, but these targets vary significantly in their comprehensiveness and ambition, according to the latest MSCI Net-Zero Tracker.

The Net-Zero Tracker, a gauge of climate change progress of the public companies within the MSCI All Country World Investable Market Index (ACWI IMI), reveals a clear trend among listed companies: more climate commitments, improved disclosures, but ever-growing carbon emissions.

Nearly half (44%) of listed companies have now set decarbonization targets, – which is 8 percentage points more than was reported in the October 2022 MSCI Net-Zero Tracker, – but this does not necessarily mean that they are all adequately addressing their carbon intensity.

Only 17% of companies’ climate targets would align carbon emissions across their total value chain with the ambitious 1.5°C goal of the Paris Agreement.

Further showing the range of commitments being made, fewer than a third (30%) of all published targets are aiming to reach net-zero emissions, despite the likelihood of voluntary and mandatory corporate climate disclosure standards coming into effect in the near future.

The Net-Zero Tracker shows that public companies are projected to deplete their share of the global emissions budget for limiting temperature rise to 1.5°C by October 2026, two months sooner than MSCI previously estimated in October 2022.

Public companies are on track to emit 11.2 gigatons of direct Scope 1 greenhouse gas emissions into the atmosphere this year, unchanged from 2022, despite making more carbon reduction commitments. This puts them on a path to warm the planet by 2.7°C this century, according to MSCI’s “Implied Temperature Rise” metric, based upon an analysis of their future emissions pathways and current, climate commitments.

Sylvain Vanston, Executive Director, Climate Change Investment Research, MSCI, comments: “The recent IPCC AR6 Synthesis report is clear. Climate change is here, measurably, as predicted, and the risk of complete ruin is now very real. We are seeing greater progress from public companies towardsr achieving essential climate goals, but the MSCI Net-Zero Tracker reveals that a significant gap remains between their climate commitments and their carbon emissions."

Find out more here.