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UN-backed report finds no G7-based stock exchange indices align with Paris climate goals — Global Issues

The Global Compact has partnered with the international nonprofit CDP on behalf of the Science Based Targets initiative (SBTi), an organization that helps companies set ambitious emission reduction targets.

Global Issues

In December 2015, more than 190 signatories in Paris agreed to limit the rise in global average temperature to well below 2 ° C (3.6 ° F) above pre-industrial levels, in the hope keep it as close to 1.5 ° F as possible. C (2.7 ° F).

Just ahead of the UK’s G7 summit which begins on Friday, the Taking the Temperature report shows indexes on major G7 stock exchanges are averaging 2.95 ° C, while four of the seven are on track. temperature of 3 ° C or more – well above the Parisian benchmark.

Stock indices consist of the largest companies listed on a country’s largest stock exchange and are essential benchmarks for understanding market trends and direction.

Deliver to Paris

As the G7 economies cover nearly 40 percent of the global economy and about 25 percent of global greenhouse gas emissions, the companies that make up the G7 have a responsibility to reduce their emissions, according to SBTi.

G7 companies have the potential to trigger a ‘domino effect’ of positive change across the global economy – Lila Karbassi, UN Global Compact

“G7 companies have the potential to bring about a ‘domino effect’ of positive change throughout the global economy,” said Lila Karbassi, Head of Programs, UN Global Compact and Chairman of the Board of SBTi , calling on the biggest listed companies in the G7 to urgently increase the climate. action.

Invest in the planet

Currently, 70 percent of the Canadian SPTSX 60 index is at a nominal temperature of 3.1 ° C and nearly 50 percent of the Italian FTSE MIB at a temperature of 2.7 ° C.

While passive investing currently represents around 40% of US funds and 20% of European funds, investors are warned that only 19% of companies listed in G7 indices have climate goals allied to the Paris Agreement.

G7 climate and environment ministers recently urged companies and investors to align their portfolios with the Paris targets and set science-based targets for net zero emissions by 2050 – at the latest.

“This report underlines the urgent need for markets and investors to meet the goals of the Paris Agreement … Governments must go further to encourage the setting of ambitious science goals,” said Ms. Karbassi.

Room for optimism

Despite these results, the momentum for action in the G7 countries is accelerating, with the analysis citing 2020 as a milestone year for climate commitments.

Some 64% of all corporate greenhouse gas emission reduction targets disclosed to CDP last year were set by companies headquartered in G7 countries, and the science targets annual rate doubled in 2020 compared to 2015 to 2019.

Urgent action

The report also identified four urgent priorities for climate action.

He recommended that businesses and governments work together to harness a cycle of positive feedback in which private actions and government policies are mutually reinforcing.

Second, companies need to work with suppliers to decarbonize supply chains.

Third, it calls on investors to build science-based goals into sustainability obligations and climate finance standards.

Finally, the report advised financial institutions to set scientific goals at the portfolio level with underlying assets to create a domino effect across all sectors of the economy.




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