Assessing Science-Based Corporate Climate Target-Setting

Assessing whether companies can achieve their climate targets is increasingly relevant for institutional investors aiming to decarbonize investment portfolios and reduce real-economy emissions of greenhouse gas. Although more and more companies are setting climate targets, including science-based emissions-reduction targets, the likelihood that these targets will be met is not always evident.

In this report, we found that, on average, companies that had committed to SBTi standards were more likely to have disclosed value-chain emissions, target-level data and GFANZ-recommended metrics than companies that had not. Companies with SBTi commitments also appeared to have made further progress on integrating emissions-reduction technologies into their product portfolios and accelerating the use of renewable energy.

The results of this assessment highlight how rigorous third-party validation processes like those under SBTi offer scope to enhance the transparency of corporate decarbonization strategies and to improve the likelihood that companies can achieve such climate targets.

Corporate Scope 1, 2 and 3 emissions disclosure in line with the GHG Protocol

Based on constituents of the MSCI ACWI Investable Market Index (IMI). Of the 9,171 constituents in the MSCI ACWI IMI, 3,753 companies had set ongoing climate targets for target years of 2023 and beyond as of March 1, 2023. This analysis excludes the double counting of issuers that are listed in multiple stock exchanges or have issued multiple classes of share types. Source: CDP, MSCI ESG Research