Most high emitters still fail to set credible short-term climate targets

Short-term climate target-setting remains problematic for most of the world’s biggest polluters, with companies either letting targets expire or cancelling them as they get closer to their deadlines.

This is according to the latest Climate Action 100+ Benchmark, which assessed the climate disclosures and strategies of 165 firms across high-emitting industrial sectors such as oil and gas, automotive, mining, cement and aviation.

The benchmark found that although most (81%) have now set a net zero target by 2050 or earlier – at least for Scope 1 and 2 – just 45% have a credible short-term target to pave the way for future decarbonisation. 

In fact, this year seven companies included in the report had targets expire without being met, and four companies scrapped their short-term targets. 

(Air New Zealand, which is not covered by the benchmark, dropped its 2030 SBTi-approved target last July.)

In addition, companies have made no progress over the past year in aligning their climate targets with a 1.5ºC scenario: instead, the proportion of companies with 1.5°C-aligned targets in the short term has decreased by 3 percentage points. Overall, the benchmark estimates that 41% of long-term targets are aligned with 1.5ºC.

Progress around emissions intensity

On the bright side, most (67%) of the 165 companies assessed have reduced their emissions intensity over the past three years – though just 27% are progressing at the pace needed to limit the temperature rise to 1.5ºC. 

The oil and gas sector is “noticeably performing worse on this assessment than others”, with only one out of 37 companies assessed (3%) reducing emissions intensity in line with a 1.5°C scenario, the benchmark report adds.

“This year’s Benchmark shows that investor momentum is moving the largest emitters to address climate-related financial risk. Corporate emissions are going down – especially in the transportation, steel, and electric utility sectors – and more climate transition action plans are being published. While it is good to see companies moving in the right direction, they still need to move faster,” said Mindy Lubber, President and CEO, Ceres and global Steering Committee member at Climate Action 100+.

Oil and gas companies ‘increasing their exposure to financial risks’

The benchmark shows some improvement in how companies allocate capital based on their climate strategies, and how they disclose this information to investors: the proportion of firms disclosing the value of their investments in unabated carbon-intensive products or assets has increased by 19 percentage points, reaching 37%. Three companies have explicitly stated that they will phase out capital expenditure in new unabated carbon-intensive assets or products.

Similarly, 38% of companies are now disclosing the value of their capital expenditure towards climate solutions – with 78% planning to increase these investments in the future.

However, capital allocation continues to be misaligned with climate goals: just over a quarter of the electric power companies assessed are aligning their coal capacity with a 1.5°C future, while oil and gas companies’ capital expenditure and broader transition strategies has regressed since the 2023 assessments,” increasing their exposure to financial risks in a 1.5°C-aligned future”, the report warns.

Read also: Most fossil fuel companies have increased emissions since the Paris Agreement