Morgan Stanley lowers climate ambition in new round of 2030 targets

Morgan Stanley’s new round of financed emissions reduction targets for 2030 include more sectors than before, but introduce new flexibility to reflect the fact that “the world is not on track to meet a 1.5°C scenario”.

The bank’s first medium-term financed emissions targets, published in 2021, consisted of a 35% emissions intensity reduction for auto and manufacturing clients, 29% for energy and 58% for power – all from a 2019 baseline.

In its first update since 2021, Morgan Stanley has added more sectors, including aviation, chemicals and mining to its climate targets and moved the baseline to 2022 to reflect data improvements.

But at the same time, the bank has now introduced a ‘target range’ whereby the upper bound range references science-based climate scenarios in line with 1.5°C and the lower bound range references a 1.7°C scenario.

“We set targets that are designed to strike an appropriate balance between being ambitious and credible while also being realistic about present near-term global challenges. At the current pace of decarbonization, the world is not on track to meet a 1.5°C scenario,” the bank notes.

Its Chief Sustainability Officer Jessica Alsford recently told Reuters that the target range is a way of “acknowledging the challenges that the global economy faces whilst being aligned, still, with the Paris Agreement,” which seeks to limit warming to “well-below 2ºC”.

Read also: Banks remain too open to coal and fossil fuel financing

New sector targets and scopes covered

Compared to the first round of targets, which covered Scopes 1, 2 and 3 and all greenhouse gases for the sector in scope, the new objectives cover different scopes of emissions depending on the sector.

For auto manufacturing, for example, Morgan Stanley is aiming for a 29% to 45% emissions intensity reduction across Scopes 1, 2 and 3 category 11 (use of sold products). Meanwhile for aviation, the firm is targeting a 13% to 24% Scope 1 reduction.

In terms of financed emissions for mining, Morgan Stanley is aiming for a 23-31% emissions cut by 2030, for Scopes 1 and 2. The banks explains this decision in the report released last week: “Mining sector Scope 3 downstream emissions are mostly driven by the processing and use of sold products, such as from the combustion of thermal coal for power generation, and iron ore, bauxite, alumina and metallurgical coal for metals production. While we do not have a metals production target at this time, emissions arising from power generation of all types (including from thermal coal) are considered within scope 1 emissions of our Power sector target.”

In the chemical sector, the bank’s target range goes from 18% to 28%, also across Scope 1 and 2.

Morgan Stanley betting on direct air capture

Also last week, the bank announced an agreement with Climeworks to purchase 40,000 tonnes of direct air capture carbon removals between now and 2037.

Commenting on the announcement, CSO Alsford said it was a way of “supporting the development of technology that can help drive the global economy’s transition to a more sustainable future”.