Companies operating in the utility, automotive and retail sectors must speed up their transitions into the low-carbon economy if they are to reach decarbonisation by 2050.
A report by non-profit CDP and French environment agency ADEME revealed companies were being slow to transition to a low-carbon economy and would not reach the EU's target to cut carbon emissions by 80-95% by 2050. Firms should introduce strong transition plans and a step-by-step trajectory to phase out fossil fuels, it said.
The report is based on a year-long pilot project, called Assessing the low-Carbon Transition (ACT), and focused on the three sectors with heavy environmental impact—electric utilities, automotive and retail. Firms involved in the study included Renault, Toyota, Decathlon and Enel, who were identified as leaders.
CDP technical director Pedro Faria said although small progress had been made, companies needed to make long-term plans that would ensure low-emission targets were reached.
“The creation of strong plans to transition to the low-carbon economy can no longer be delayed,” he said.
“Given the long lead times to shift strategy and make low-carbon investments, companies need to start moving to develop a long-term vision coupled with a clear step-by-step trajectory that ensures they are on the right path to the low-carbon economy in five, 10 and ultimately 33 years from now.”
Companies in the electric utilities sector, which accounts for around a quarter of global emissions, were ahead of the curve on climate strategies but were lagging behind in moving their portfolios away from fossil fuels.
The report suggested increasing the share of renewables in the energy mix, exploring demand response and energy storage.
For the auto sector, which represents almost 14% of fossil fuel emissions, the report noted the need for a critical adoption of low-carbon vehicles within the next 15 years, to reach the target of having 80m low-carbon vehicles on the road by 2025.
To do so, the report suggests immediate action is needed to upgrade technology and production capacity.
Retailers were marked as a critical actor in the development of circular economy, where they could influence consumer behaviour and demand to make sustainable products and services more attractive for buyers and investors.
Marie-Christine Premartin, programs executive director at ADEME, said companies that publically committed themselves to the initiative needed to show real progress.
“According to the Paris Agreement, the private sector is part of the journey to a low-carbon economy, and lots of commitments are already taken by companies—things are moving forward,” she said.
“By developing robust and transparent methodologies, the ACT initiative gives the opportunity to transform commitments form companies into real accountability.”
In 2009, the EU committed to the goal of keeping global warming below two degrees centigrade and formally adopted the objective to reduce emissions by 80-95% by 2050 in comparison to 1990 levels.
CDP is a international non-profit oranganisation which aims to drives companies and governments to reduce greenhouse gas emissions, safeguard water resources and protect forests.