Leading FTSE 100 sustainability report ranks utility companies in top 20 but warns strategies to meet Net Zero are lacking
• Utility companies ranked in the FTSE 100 top 20 include SSE, United Utilities and Centrica
• Investor pressure having a significant impact on corporate sustainability reporting
• 45% of FTSE 100 are committed to Net Zero by 2050, but only 16% have a strategy to meet the commitment
London, September 23, 2020 – EcoAct, the international climate and sustainability consultancy, has today released the 10th edition of its Sustainability Reporting Performance of the FTSE 100. The report, which includes a leader board ranking the top 20 companies for environmental sustainability disclosure reveals that although an increasing number of companies are setting a Net Zero target, there is an absence of a clearly defined strategy for many.
This year’s report shows that, as a sector, utilities scored well with SSE, United Utilities and Centrica all ranked within the FTSE 100 top 20.
60% of utility companies have made firm commitments to Net Zero by 2050, with 40% of these having outlined a clear strategy for achieving that target. To set this in context, 45% of all FTSE 100 companies have made a commitment to Net Zero, with only 16% having a strategy to meet the goal.
93% of utility companies are also bringing low carbon solutions to their customers, indicating their recognition of the opportunities of this energy transition.
Across the wider study, which assesses all companies in the CAC 40 (France), DOW 30 (USA) and the IBEX 35 (Spain) as well as the FTSE 100, utility companies are highlighted for their good performance in sustainability reporting.
Scores allocated to all FTSE 100 companies in the report range from 0% at their lowest to 92% at their best, demonstrating a highly disparate mix of sustainability performance and indicating that adequate climate-related reporting is still not a given in large companies.
“Over the ten years we have undertaken this research, we’ve continued to see year-on-year improvements to climate-related reported best practice”, said Stuart Lemmon, CEO, Northern Europe, EcoAct. “Although we are encouraged to see an uplift in company commitments to Net Zero this year, if we are to succeed in this goal, it is imperative that commitments are backed by sound and achievable strategy.”
Key report findings:
Investors driving change
A key driver for best practice reporting is increased pressure from investors demanding better climate-related disclosures as set out by The Task Force on Climate-related Financial Disclosures (TCFD), led by former Governor of the Bank of England, Mark Carney. Alignment to TCFD has increased rapidly from only 12% of all international companies scored in 2018 to 50% in 2020 as companies respond to investor demands for business climate risk assessments. Above average, 73% of utility companies are aligning their reporting with the TCFD.
Science- based targets
Science Based Targets (SBTs) are ambitious emission reduction targets aligned to a decarbonisation pathway to limit global warming to 1.5°C or well below 2°C as advised by climate scientists. The report shows that that companies are more likely to be on track to meet carbon reduction targets if they set SBTs, but that across the study the proportion of companies setting these targets is well under 50%. However, this year 67% of utility companies have set an SBT and 70% of these are aligned with this most ambitious 1.5oC or well below 2oC scenario, which is promising progress.
Scope 3
Three quarters of FTSE 100 companies assessed in the research are calculating and disclosing their Scope 3 emissions – those indirect emissions occurring across a company’s value chain from sources not owned or controlled by the company. However, only 33% of the FTSE 100 have a target to reduce these emissions. For utility companies this figure is 55. These emissions play a crucial role in identifying the greatest sources of emissions involved in a company’s total operations and are key to a decarbonisation strategy. Success in meeting Net Zero is dependent on more companies demonstrating transparency and proactivity in reporting their full value chain emissions and exerting their influence to affect wider positive change.
Assessing risk
While the report reveals that 81% of UK companies are assessing risks to their operations from climate change, only 64% are assessing them across their value chain. And only 56% have plans in place to mitigate those risks. Particularly vulnerable to climate risk, all utility companies are undertaking risk assessment. In addition, 87% have undertaken Climate Scenario Analysis (CSA) to explore a range of potential outcomes linked to different climate scenarios, which is vital to ensure resilience to an uncertain climatic future.
COVID-19
As a consequence of COVID-19, much of the world’s industry went into lockdown the second quarter of this year and we witnessed a significant drop in CO2 emissions as a result. Although it is too early to measure the impacts to corporate emissions in this year’s report, it is estimated that overall emissions globally for 2020 will be down by 5-7%. However, EcoAct warns that with a shift to home working that needs to be accounted for, emissions reductions for businesses should not be assumed.
Next year the research will be looking at how companies have disclosed the impacts of COVID-19 on their emissions and expecting the climate leaders to be improving their strategies for Net Zero.
A copy of the report is available here: https://info.eco-act.com/en/sustainability-reporting-performance-ftse-100-2020
Notes for editors:
The research uses only publicly available information. The report defines sustainability as environmental sustainability rather than wider, social and governance issues. Companies are scored against 64 tailored criteria covering four subject areas: Measurement & Reporting; Strategy & Governance; Targets & Reduction; and Engagement & Innovation. The most recent disclosures are scored using annual integrated and corporate sustainability reports, and any additional links from company websites, including sustainability micro-sites and blogs.
About EcoAct
EcoAct is a privately held international sustainability consultancy and project developer, headquartered in Paris, with 160 employees in offices across France, the United Kingdom, Spain, the United States and Kenya. The company has unmatched depth and breadth in delivering holistic solutions to enable businesses to reduce their carbon emissions while driving commercial performance. EcoAct has undertaken carbon reduction and sustainability projects for some of the world’s leading brands while also developing and partnering with carbon offset, biodiversity and economic development programmes across Africa, Asia, China and South America. EcoAct is a CDP gold partner, a founding member of ICROA, a strategic partner in the implementation of the Gold Standard for the Global Goals and reports to the UN Global Compact.
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Susan Brownlow
Media Relations Consultant
EcoAct UK
Telephone: +44 (0)7739 456292
Email: susan.brownlow@wordsforindustrypr.com