The world’s biggest and most influential companies could unlock $1.3 trillion in annual low-carbon spending if they raised their low-carbon investments from 7% now to 30% of capital expenditure, a new report by the non-profit World Benchmarking Alliance has shown.
The Netherlands-based World Benchmarking Alliance (WBA) evaluated 1,600 companies, whose operational emissions alone equate to at least 25% of global energy-related emissions.
The corporate choice of the share of low-carbon investment of total capex will influence the pace and direction of the transition, according to WBA.
The non-profit has found that each year, the world’s most influential companies report about $3.2 trillion in capital expenditures. But only a median 7% of this massive capex is earmarked for low-carbon investments.
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The corporates can boost global spending on low-carbon technologies from the capital they sit on, WBA’s analysis found.
If all assessed companies boost low-carbon investment to 30% of their capex, this would unlock about $1.3 trillion in annual low-carbon spending globally.
Such spending would be some 30% of the $4.5 trillion that the International Energy Agency (IEA) estimates is needed annually by 2030, according to WBA’s report.
“This indicates that meaningful progress in financing the transition can be achieved in the near term through deliberate capital allocation to scale existing solutions,” the authors of the study wrote.
Corporations are an underused tool for mobilizing climate finance, WBA Executive Director Gerbrand Haverkamp told Bloomberg, commenting on the study.
“What we want to see is that every major company in the world develops a transition plan so these transition plans can be scrutinized by investors, by regulators, by stakeholders and by peer companies,” Haverkamp said.
However, corporates, while including some ESG metrics in reporting and targets, aren’t rushing to boost low-carbon investment, especially amid the backlash against ESG investment over the past year since U.S. President Donald Trump took office.
By Tsvetana Paraskova for Oilprice.com
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