The Paris-compliant company: Measuring transition performance using a strict science-based approach

Saphira Rekker, Matthew Ives, Belinda Wade, Chris Greig and Lachlan Webb

INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

Abstract: To meet climate goals, it is necessary for companies to become Paris-compliant. Two recent initiatives, the Transition Pathway Initiative (TPI) and Assessing low-Carbon Transitions (ACT) initiative, have proposed methodologies to benchmark companies􏰀 performances against science-based emission reduction levels. However, these initiatives have several limitations, including a shifting baseline, and a focus on carbon-intensities. Here, we propose a methodology that overcomes these limitations by ensuring each company strictly adheres to the Paris carbon budget. Applying our metrics to the ten highest emitting companies in the Australian electricity sector, 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 in assets to transition risk. We demonstrate that even using the more prescriptive ACT guidelines allows these companies to exceed their carbon budgets up to 235% by mid-century. Applying our proposed method ensures accurate tracking of progress, which is imperative for companies and stakeholders to align their decision-making with the Paris Agreement.

Pages: 28 pages
Date: 2021-01, Revised 2021-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-isf
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.inet.ox.ac.uk/files/RnR_Manuscript_The ... Company-ForDistr.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:amz:wpaper:2021-03

Access Statistics for this paper

More papers in INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by INET Oxford admin team ().