G7 companies are on a path to a 2.7°C temperature increase

Las empresas españolas incumplen el acuerdo de París y van camino de los 2,7ºC de calentamiento global

The G7’s private sector has an important role to play in keeping the Paris Agreement’s 1.5°C target alive. Strong momentum in 2021, particularly in the runup to last year’s COP26, saw the number of corporates committing and setting climate targets increase rapidly.

Yet, our analysis shows that the greenhouse gas (GHG) emissions reduction targets publicly disclosed by companies in G7 economies are still only ambitious enough to align with a 2.7°C decarbonization pathway — or 2.4°C if emissions from corporate supply chains, known as Scope 3 emissions, are excluded. Both are still well above the Paris Agreement’s goal to keep Earth’s temperature rise at or below 1.5°C — the upper temperature limit that science demands to avoid the most catastrophic environmental impacts.

Following an 85% increase in the number of European companies with science-based targets last year, over half (51%) based on market capitalization have now set targets through the Science-Based Targets Initiative (SBTi). This means that the targets have been developed consistent with pathways for carbon reduction anchored in climate science and approved by the SBTi. The most recent SBTi Progress Report found that companies with science-based targets decarbonize significantly faster than companies without targets.

This fast progress in Europe has ‘cooled’ the temperature of the European economy 0.3°C since 2021. Still, the emissions reduction targets publicly disclosed by European companies are now aligned with a 2.4°C decarbonization pathway, or 2.2°C if corporate Scope 3 emissions (value chain) are excluded.

Looking beyond the G7, European corporates score ahead of their counterparts in Asia and North America across industries. Based on Scopes 1 and 2 emissions, companies headquartered in North America are collectively on a path to a 2.5°C rise in temperature, while companies headquartered in Asia are on a path to 3°C. Both are significantly higher than Europe’s 2.2°C.

The analysis shows warmer temperature ratings in nearly all sectors and regions when all value-chain emissions (Scopes 1 through 3) are included. This reflects that Scope 3 emissions, concentrated largely in supply chains and the use of end products, are harder to measure and manage. As a result, targets are much less widespread and also less ambitious.