Fidelity International’s third annual ESG analyst survey has found that less than 60% of companies are on track to cut their carbon emissions to net zero by 2050.
The survey studies the views of Fidelity’s in-house analysts across the world, aggregating information from 15,000 individual company interactions to find key ESG trends.
According to the survey, less than 60 per cent of companies are currently on track to cut their carbon emissions to net zero by the UN agreed target of 2050, and only one in four will do so by the more ambitious target of 2030. 69 per cent of European companies that are already allocating the funds needed to hit those targets by 2050.
One of the strongest findings of the survey is the effectiveness of government regulation in changing companies’ behaviour. Investors, consumers, employees, and competitors all have a role to play in shifting practices, but it appears that regulatory updates can compel businesses to improve the most. Over 60 per cent of analysts said that regulation was one of the top three most important factors for driving change in environmental, social, and governance practices.
Analysts also report that investor engagement and shareholder action are among the most effective ways of encouraging change in governance, and around half place engagement as one of the top three ways to improve environmental and social practices.
Jenn-Hui Tan, Global Head of Stewardship and Sustainable Investing at Fidelity International, says, “Our ESG Analyst Survey asks whether companies’ net zero plans are sufficient. The answer is: not yet and a greater collective effort is needed. Further funding, technological innovation and regulation are just some of the areas identified if we are to close the gap between ambition and reality. But corporates cannot do it alone. Governments, like policy decision makers have a key role to play in creating an enabling environment for the transition, as does the financial sector through investor engagement, shareholder action and asset allocation.”
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