10 November 2022

Why companies matter for the global climate agreement

Louisa O'Connell

Head of Net Zero Research

Elena Aguirre Martín

Head of Rating Operations

Ronan Carr

Chief Research Officer

8 min

The Paris Agreement was the largest global agreement on climate change the world has ever seen. It committed almost every country in the world to reduce their emissions in line with keeping temperatures below 1.5ºC. This has led to countries making net zero commitments and implementing regulations to achieve their targets. However, there is a gap between the country-level commitments and policies and what is needed to achieve global decarbonisation. The private sector is driven to accelerate global decarbonisation by stakeholder expectation and investor pressure.

There are two key ways companies can contribute to global decarbonisation. First, they can set carbon reduction targets and develop carbon reduction strategies aligned to the frameworks available to them. Second, they can further accelerate decarbonisation through their participation in the Voluntary Carbon Market (VCM).

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Key Takeaways:

1. The Paris agreement led to 80% of the world’s emissions being covered by country-level net zero commitments - now leading to expanding regulations impacting the corporate sector.

2. Private listed companies account for 40% of global emissions and markets seek ambitious disclosure and decarbonisation plans.

3. To bridge the gap to 1.5ºC warming above pre-industrial levels, companies must both decarbonise their own value chain and contribute to global climate finance.

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