Abstract:

The achievement of the Paris climate goals of well-below 2 degrees of warming requires that companies align their emissions with this goal. To measure whether companies are compliant with the Paris Agreement targets we propose several strict conditions specifying what an emissions allocation methodology requires before it can be classified as Paris-Compliant, and then examine the current methodologies for their compliance with these conditions. Our conditions focus on the need for a common ambitious base year for all companies that is consistent with an underlying decarbonisation pathway aligned with the Paris goals. Additionally we propose five operationalisation requirements to ensure companies can declare they are on a Paris Compliant Pathway and that any re-alignment pathway strictly adheres to the Paris-compliant carbon budget. Applying example Paris-Compliant Pathways and associated metrics to ten high emission energy companies and eight cement companies, we find that none are currently Paris-compliant, with every year of delayed action increasing their required rate of decarbonisation and hence the exposure of billions of investment dollars to transition risk. Applying our proposed method ensures the Paris carbon budget will be met and that progress can be tracked accurately, which is imperative for companies and stakeholders to align their decision-making with the Paris Agreement.

Citation:

Rekker, S., Ives, M., Wade, B., Greig, C. & Webb, L. (2021). 'The Paris-compliant company: Measuring transition performance using a strict science-based approach'. INET Oxford Working Paper No. 2021-03. (In review: Nature Communications)
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