The findings of MSCI (MSCI.N), an index provider and data organization, were based on an investigation of over 4,500 listed companies in the Group of 20 major nations.
It discovered that businesses have made a strong start on decarbonizing their operations by focusing on “low-hanging fruit” – the global warming caused by their emissions has been reduced to 2.5 degrees Celsius from 3 degrees in October 2021.
However, direct greenhouse gas emissions from corporations are increasing, and MSCI projects that they will be 11% higher in 2023 than last year.
According to MSCI, companies in nine of the G20 countries are expected to reduce their emissions at a slower rate between 2022 and 2030 than they did in the five years following the 2015 Paris climate agreement, when the world vowed to limit global warming to 1.5 degrees Celsius over pre-industrial levels.
“Following a strong start, progress from listed companies in the remainder of the decade is set to slow now that the low-hanging fruit has been picked,” said Linda-Eling Lee, Head of the MSCI Sustainability Institute.
“This makes it imperative to focus on policy innovation and technological advancements to help limit the cost of low-carbon energy.”
MSCI-companies are expected to exceed the emissions limit that would limit global temperature rise to 1.5 degrees Celsius by April 2026, three months sooner than estimated in July.
Companies are also expected to decarbonize at a slower rate than many of the countries in which they operate. According to MSCI, governments in 13 G20 countries will reduce emissions by an average of 4.5% per year between 2022 and 2030, up from a 0.8% yearly reduction in the five years following the Paris Agreement.
MSCI’s Net-Zero Tracker examined 4,458 firms from G20 countries that are participants of the MSCI ACWI Investable Market Index.
This month marks the start of the United Nations COP28 climate meeting. According to UN Secretary-General Antonio Guterres, major polluters must do more to combat global warming.