Heavy industry sectors present $856bn climate risk

18th February 2021


Emissions istock 639739398 0

Related Topics

Related tags

  • Business & Industry ,
  • Energy ,
  • Resource extraction ,
  • Fossil fuels

Author

IEMA

The world's heavy industry sectors are failing to align their CO2 emissions with the Paris Agreement, presenting a $856bn (£619bn) market risk for investors, the Transition Pathway Initiative (TPI) has revealed.

After analysing 111 large publicly-listed industrial companies, the TPI found that just 16 are aligned with an emissions reduction pathway that is compatible with keeping global warming at 2°C or below.

These firms are from the aluminium, cement, diversified mining, steel and paper sectors – which account for roughly 25% of total energy emissions – and are deemed ‘hard to decarbonise’ as there is no straightforward low-carbon replacement technology for their products or processes.

The findings show that just one company in the aluminium and paper sectors is aligned with a 2°C or below pathway by 2050, compared with six steel firms.

“A stark $856bn market risk jumps out at investors, with only 14% of heavy industry companies on a path to keep global warming at 2°C,” said Adam Matthews, co-chair of the TPI.

“From recycling systems to technological innovations, the solutions are now there, and investors are ready to push for much bolder action from these sectors in the run up to COP26.”

The outlook for the heavy industry sector is marginally more encouraging for climate-conscious investors from a 2030 point of view, with 22% of companies aligned with 2°C or below before then.

The reason fewer are aligned with 2°C or below after 2030 is because the pace of decarbonisation required in the industrial sector really picks up next decade, requiring drastic falls in emissions between 2030 and 2050 to meet Paris Agreement goals.

The TPI said that more industrial companies need to set longer-term targets to 2050 that require greater levels of decarbonisation, and that the circular economy can help address the challenges by using new processes to design out waste and pollution and recycle more products and materials.

“Industrial sectors like mining and steel form the building blocks of the global economy and are some of the hardest sectors to decarbonise,” Matthews continued.

“But they account for more than nine gigatons of greenhouse gases, and key decisions will be taken by companies and investors over this coming decade that will determine the role they will play in societies achievement of the Paris Agreement.”

Image credit: iStock

Author: Chris Seekings

Subscribe

Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.


Transform articles

How much is too much?

While there is no silver bullet for tackling climate change and social injustice, there is one controversial solution: the abolition of the super-rich. Chris Seekings explains more

4th April 2024

Read more

One of the world’s most influential management thinkers, Andrew Winston sees many reasons for hope as pessimism looms large in sustainability. Huw Morris reports

4th April 2024

Read more

Alex Veitch from the British Chambers of Commerce and IEMA’s Ben Goodwin discuss with Chris Seekings how to unlock the potential of UK businesses

4th April 2024

Read more

Regulatory gaps between the EU and UK are beginning to appear, warns Neil Howe in this edition’s environmental legislation round-up

4th April 2024

Read more

Five of the latest books on the environment and sustainability

3rd April 2024

Read more

Ben Goodwin reflects on policy, practice and advocacy over the past year

2nd April 2024

Read more

In 2020, IEMA and the Institute and Faculty of Actuaries (IFoA) jointly wrote and published A User Guide to Climate-Related Financial Disclosures. This has now been updated to include three key developments in the field.

2nd April 2024

Read more

Hello and welcome to another edition of Transform. I hope that you’ve had a good and productive few months so far.

28th March 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close