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Measuring corporate Paris Compliance using a strict science-based approach

Author

Listed:
  • S. Rekker

    (University of Queensland)

  • M. C. Ives

    (University of Oxford)

  • B. Wade

    (University of Queensland)

  • L. Webb

    (University of Queensland)

  • C. Greig

    (Princeton University)

Abstract

The achievement of the Paris Agreement climate goals of well-below 2 degrees of warming requires companies to align their greenhouse gas emission reductions with this goal. To measure whether companies are compliant with the Paris targets we propose several strict conditions that any emissions allocation methodology must meet before it can be classified as Paris-Compliant. Our conditions focus on the need for a common, and early as practicable, base year for all companies and consistency with an underlying Paris-aligned decarbonisation pathway. Additionally, we propose four operationalisation requirements to ensure companies can declare they are on a Paris Compliant Pathway including calculations of their carbon budgets and re-alignment pathways. Applying example Paris-Compliant Pathways and associated metrics to ten high emission electric utility companies and ten cement companies, we find that all but one of these companies are not 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 this proposed method will ensure the Paris carbon budget is met and that progress can be tracked accurately - an imperative for any companies and stakeholders seeking to align their decision-making with the Paris Agreement.

Suggested Citation

  • S. Rekker & M. C. Ives & B. Wade & L. Webb & C. Greig, 2022. "Measuring corporate Paris Compliance using a strict science-based approach," Nature Communications, Nature, vol. 13(1), pages 1-11, December.
  • Handle: RePEc:nat:natcom:v:13:y:2022:i:1:d:10.1038_s41467-022-31143-4
    DOI: 10.1038/s41467-022-31143-4
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    References listed on IDEAS

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    1. Takeshi Kuramochi & Mark Roelfsema & Angel Hsu & Swithin Lui & Amy Weinfurter & Sander Chan & Thomas Hale & Andrew Clapper & Andres Chang & Niklas Höhne, 2020. "Beyond national climate action: the impact of region, city, and business commitments on global greenhouse gas emissions," Climate Policy, Taylor & Francis Journals, vol. 20(3), pages 275-291, March.
    2. Aoife Brophy Haney, 2017. "Threat Interpretation and Innovation in the Context of Climate Change: An Ethical Perspective," Journal of Business Ethics, Springer, vol. 143(2), pages 261-276, June.
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    Cited by:

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    2. von Zedlitz, Gerrit, 2023. "Mind the gap?! The current state of biodiversity reporting," SAFE White Paper Series 95, Leibniz Institute for Financial Research SAFE.
    3. Anton Pichler, 2024. "Transition dynamics of electricity asset-owning firms," Papers 2412.11597, arXiv.org.
    4. Timo Busch & Charles H. Cho & Andreas G. F. Hoepner & Giovanna Michelon & Joeri Rogelj, 2023. "Corporate Greenhouse Gas Emissions’ Data and the Urgent Need for a Science-Led Just Transition: Introduction to a Thematic Symposium," Journal of Business Ethics, Springer, vol. 182(4), pages 897-901, February.
    5. Clara Privato & Matthew P. Johnson & Timo Busch, 2024. "Raising the bar: What determines the ambition level of corporate climate targets?," Climatic Change, Springer, vol. 177(9), pages 1-24, September.
    6. Gregory Trencher & Sascha Nick & Jordan Carlson & Matthew Johnson, 2024. "Demand for low-quality offsets by major companies undermines climate integrity of the voluntary carbon market," Nature Communications, Nature, vol. 15(1), pages 1-15, December.
    7. Sam Fankhauser & Sugandha Srivastav & Ingrid Sundvor & Stephanie Hirmer & Gireesh Shrimali, 2023. "Net zero portfolio targets for development finance institutions: Challenges and solutions," Global Policy, London School of Economics and Political Science, vol. 14(5), pages 716-729, November.

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