When climate experts start with the boiling frog comparisons, the news isn’t going to be good.
Such was the case this week when Andreas Hoepner, a sustainable finance expert, joined European Commission experts, professors and financial pros for an EU-focused discussion online about the failure of corporations to report carbon emissions.
“We are equivalent to the frog in the water glass that is gradually boiled,” said Hoepner, a member of the EU technical expert group on sustainable finance and a professor of operational risk, banking and finance at University College Dublin. “We can’t jump at this stage anymore” since the easy solutions are gone. He said the only option is a disciplined greenhouse gas drawdown.
Speaking at the Sustainable Finance Innovation among European Financial Centres webinar, Hoepner said most of the world’s biggest corporations aren’t meeting their reporting requirements under the Paris Agreement.
Investors don’t know how much carbon companies are pumping into the atmosphere, so they can’t make informed decisions or adjust their portfolios to reward companies tackling climate change and punish those that don’t.
Advocacy group 100% Climate Disclosure, citing 2016 Bloomberg data, says 21 firms worldwide report all of their emissions. Among them are AbbVie, Adidas, Microsoft, and Royal Dutch Shell.
The CO2 diet mandated by the EU and Hoepner’s task force requires investors to reduce their exposure to greenhouse gas-emitting assets by 7% every year. Emissions need to be measured accurately to make sure the goals are being met, said Hoepner. He is part of an EU group tasked with developing an investment style to help reduce greenhouse gas emissions.
Such reductions would help take the world from 38.3 gigatons of CO2 a year to net zero in the next 30 years, by offsetting the emissions the world can’t do without in addition to carbon capture and storage.
- Only about two dozen companies worldwide fully report the emissions they are directly responsible for, Hoepner said. Most other companies are underreporting their emissions “at least to a degree if not to a significant degree,” he said.
- Sovereign wealth funds can exert direct influence on investments in fossil fuel companies. Ireland will sell about $332 million of shares in coal, oil, peat and gas companies. Norway is taking similar steps, but secondary investors must influence indirectly to transform fossil fuel companies as shareholders.
- Better, more accurate reporting is needed to keep the frog from boiling.