Corporate action to decarbonise is slowing and large listed companies are now on course to breach the emissions limit needed to keep global temperature rises below 1.5 degrees Celsius by April 2026, MSCI's Net-Zero Tracker showed on Tuesday.
It found that companies had made a good start on decarbonising their businesses by picking "low-hanging fruit" - the global warming associated with their emissions is down to 2.5 degrees Celsius from 3 degrees in October 2021.
However, businesses' direct greenhouse gas emissions are growing and MSCI estimates they will be 11% higher in 2023 than last year.
Companies in nine of the G20 countries are forecast to reduce their emissions at a slower rate between 2022 and 2030 than they did in the five years after the 2015 Paris climate accord, when the world pledged to keep global warming to 1.5 degrees above pre-industrial levels, MSCI said.
"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."
The companies analysed by MSCI are forecast to breach the emissions limit that would keep the global temperature rise to 1.5 degrees by April 2026, three months earlier than projected in July.
Companies are also set to decarbonise slower than many of the countries in which they are based. Governments in 13 of the G20 members will reduce emissions by an average of 4.5% annually between 2022 and 2030, up from a 0.8% annual fall in the five years after the Paris Agreement, MSCI said.
MSCI's Net-Zero Tracker analysed 4,458 companies that are constituents of the MSCI ACWI Investable Market Index and based in G20 countries.
The United Nations COP28 climate summit begins this month. U.N. Secretary-General Antonio Guterres has said big polluter nations must do more to tackle global warming.
