99 percent of Spanish companies do not have an ecological transition plan in line with the objective established in the Paris Climate Agreement of limiting global warming to 1.5ºC by the end of the century, so for the moment They are a long way from developing credible plans along these lines, despite the fact that this requirement will soon be mandatory in the EU as a whole, where companies will have to report these plans in their annual reports.
That is one of the main conclusions of the report. Stepping up elaborado por Carbon Disclosure Project (CDP) (1) and the consultant Oliver Wyman, which points out that only 1 percent have this plan and less than 5 percent show progress in this regard, despite the fact that half of the corporations declare that they have such a strategy.
The work collects information from companies that represent around 75 percent of the European stock markets, including Spain, which scores worse than companies from other neighboring countries.
Lacking ambition and transparency
In addition, the document reflects that less than a third of companies link the remuneration of their managers with obtaining results in areas such as climate, water and deforestation and that up to 40 percent of European corporate loans that have been analyzed –around 1.8 trillion euros– finance companies with limited progress on their plan to align with the 1.5°C target.
In any case, the report shows that close to half of the companies analyzed (49 percent) affirm that they have a climate transition plan to limit global warming to 1.5ºC, but most of these lack ambition and transparency in the key areas that reveal serious performance such as governance, financial planning, involvement and commitment to the value chain.
Likewise, between 30 and 45 percent of companies declare themselves “developing”, that is, they have less ambitious emissions targets (in line with the 2°C target) and publish information on at least half of their emissions. indicators, although most companies showed “limited” progress.
Spain, worse than the European average
By country, Spanish companies have obtained worse results than the European average, with only 1 percent of the companies among the “advanced” and 33 percent of them “developing”. Although nine out of ten have initiatives to reduce greenhouse gas emissions, the report observes “clear gaps” in the measures necessary to achieve the long-awaited path of 1.5ºC.
Specifically, only 26 percent of Spanish companies assess to what extent spending or income is aligned with the 1.5ºC objectives and less than 40 percent incorporate climate issues in contacts with suppliers.
Another of the conclusions of the document indicates that up to 40 percent of all outstanding corporate debt of the companies analyzed (1.8 trillion euros) currently finances those that do not have clear objectives or evidence that they are developing credible transition plans.
In fact, the report warns that access to finance could become more difficult for companies as banks try to decarbonise their portfolios to achieve neutrality targets.
Financial institutions
For example, eight out of ten financial institutions that report to CDP are already assessing their clients’ alignment with the 1.5ºC target in at least some of the key sectors.
The work has valued, in addition to the climate path, the commitments of the companies with biodiversity, deforestation and water security and, in this sense, 7 percent of the companies affirm that they have a firm objective of reducing emissions, water consumption and deforestation, while 39 percent declared having made a public commitment to biodiversity.
In this regard, ‘Stepping up’ exposes that it is necessary to encourage company managers to achieve the objectives since 54 percent of them link the remuneration of managers to the climate, while less than a third do so in relation to climate change, deforestation and water.
However, it highlights that before the Corporate Sustainability Reporting Directive enters into force in 2024, already 71 percent of companies that report data on climate change, deforestation and water security to CDP already do so in their annual report. management for investors, although only one in four companies does so in relation to biodiversity.
Analysts have also indicated that one in five companies have a good practice policy to reduce the impact on water, and 29 percent for non-deforestation.
Clear goals and plans
For CDP executive director Maxfield Weiss, all companies that influence the environment not only need clear objectives, but also clear plans to meet them and evidence that they are doing so.
In this regard, remember that the EU regulations will not take long to enter into force and then it will be mandatory for companies to have “clear” plans for the transition of their business models that are aligned with the 1.5ºC objective.
“Only a small cohort of companies of less than 5% reveal all the data we need to judge. And, of course, the weather is only one component of the broader challenge facing companies. As expectations of For companies to include nature in their transition planning, this report shows that most companies have yet to step up and show investors, lenders and regulators that they are ready to act Companies cannot achieve balance reduction to zero without addressing its impacts on nature: there is no time to lose”, he has valued.
Finally, the executive director of Climate and Sustainability at Oliver Wyman, Pepa Chiarri, has urged to continue advancing in the scope and quality of the transition plans of European companies in the next 2-3 years, since many transition plans Important elements are still missing, especially when it comes to translating strategic climate objectives into concrete action plans and value chain engagement.
“This level of precision is necessary if companies want to move forward with the transition and credibly demonstrate that they are on track to meet climate targets. Companies with ambitions to lead the transition will need to go beyond climate and incorporate their commitments on biodiversity and nature in its transition agenda to a sustainable economy”, he concluded.
References
- (1) Carbon Disclosure Project (CDP).