Amazon’s recent announcement that its operations will be carbon neutral by 2040 stands out for its sheer size. But Amazon is only one among dozens of companies that announced new carbon-intensity benchmarks ahead of this week’s United Nations General Assembly.
It’s hardly a new phenomenon. Eighty-one percent of S&P 500 companies had set emissions-reduction or energy-use targets by at least four years ago. But many of these amounted to business as usual; the goals were set according to existing regulations, or emission-abatement projects already underway. Today’s targets are more ambitious because they’re based on science.
That is, the targets are set to enable companies to do their share to lower emissions enough to keep warming under 2 degrees Celsius, the scenario outlined in the U.N. Paris Agreement. They’re the first targets to align the private sector with the larger fight against climate change.
And that’s important, because companies have so much work to do. New research from BloombergNEF has found that the 237 companies that had approved science-based targets through July 2019 (with a cumulative market cap of $6.5 trillion) will need to collectively reduce their emissions by 139 million tons of carbon dioxide by 2030.
This is equivalent to eliminating half of Spain’s annual emissions. And the total will only grow as hundreds more companies set targets.
Certain industries will have an easier time than others hitting their marks. Utilities, for example, which are expected to account for 60% of the emission reductions in BNEF’s analysis, have already been switching to clean energy from coal and natural gas. On the other hand, materials manufacturers, which produce emissions via energy-intensive chemical processes, will have a harder time achieving their goals.
Unfortunately, science-based targets have yet to be set for several of the world’s heaviest-emitting businesses — including agriculture, which produces 24% of global emissions, and the oil and gas industries, which produce 10%.
All this adds context to a recent announcement from Rio Tinto Plc that it will work with China Baowu Steel Group and Tsinghua University to lower the steel sector’s emissions. Rio Tinto does not actually have any emissions from steel-making; it produces only the coal and iron ore inputs. Its steel-making customers are the emitters, but Rio Tinto can help by exerting influence on their activities. That matters, because steel production accounts for 7% of all carbon emissions. Those emissions are hard to account for, and hard to abate — and therefore, all the more worth addressing with science-based targets.
Nathaniel Bullard is a BloombergNEF energy analyst, covering technology and business model innovation and system-wide resource transitions.
Kyle Harrison is a BloombergNEF analyst focused on corporate energy strategy.
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