TPI Warns Oil, Gas Firms Failing Emissions Goals
The Transition Pathway Initiative (TPI) has warned that the world’s oil and gas industry is not doing enough to curb their emissions in line with Paris Agreement commitments.
The initiative, which helps asset owners assess firms’ progress in curbing their carbon footprint, published new research on September 18, rating the performance of 50 leading oil and gas companies and 59 electric utilities. While it found that 29 of the utilities had emissions targets aligned with Paris pledges made by national governments, the same was true for only two oil companies, Repsol and Shell. Furthermore, none of the assessed fossil fuel companies had strategies in line with the goal of capping global warming at 2oC.
In terms of management quality, it said 31 oil and gas firms were not disclosing the indirect emissions from their sold products, while 23 had not set quantitative targets to cutting emissions. Some 26 companies remain at the same level as their last assessment, while 15 have moved up, five have gone backwards and four do not have trend data available.
In contrast, the research found that not only were 49% of assessed electric utilities on target with governments' Paris commitments, but more than 20% were aligned with the below-2oC target for warming. Many energy companies in more developed countries have begun phasing out the use of coal-fired electricity, while expanding their renewables business.
“We, as a major institutional investor, are concerned that transition risk – the large and growing gap between government targets and company ambitions – is a major source of investment risk,” Helena Vines Fiestas, global head of stewardship and policy at BNP Paribas Asset Management, commented.
“There is no doubt that oil and gas companies are in a difficult position in navigating the transition to a low carbon economy,” said Euan Stirling, global head of stewardship and ESG investing at Aberdeen Standard Investments. “That makes it all the more important that we have at least some sector constituents who are starting to respond to the climate crisis by repositioning their businesses from the top down in the same way that many power generators have.”
TPI is backed by major pension funds and other investors managing $15 trillion in assets.