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November 16, 2021

Moving to the “deployment and delivery” phase of net zero

Pressure is rising to progress towards the “deployment and delivery” phase of net zero, and convert ambitious commitments into action. To do so, investors will need to navigate a number of critical challenges, including weak corporate climate disclosure, particularly amongst small- and medium-sized enterprises (SMEs), and a lack of readiness across many carbon-intensive sectors for a rapid transition.  

Companies are increasingly stepping up ambition on net zero. Although this is clearly a positive development in the shift to a resilient, low-carbon global economy, commitments need to be backed up by action in order to hold up to scrutiny. Moody’s latest report “Ready or not? Sector Performance in a Zero-Carbon World”, published on 8 November, found that companies’ stated emissions reduction plans today are aligned with a global temperature increase of at least +2.6°C by 2100 – far short of our 1.5°C ambitions. Action is needed to meet expectations, as investors, customers and policymakers call for greater transparency and accountability in realizing climate commitments.

Moody’s delegation at COP26 contributed to several discussions on the challenges faced by companies and investors on accelerating action on, and adoption of, net zero targets.  

Rahul Ghosh, Managing Director and Head of Outreach & Research, Moody’s ESG Solutions Group joined the panel: Accelerating Ambition Loops - Linking Policy, Innovation & Investments to Achieve a Green Transition at the World Climate Summit, a COP26 Side Event. In this he described the need for improved climate disclosure as a necessary prerequisite to a successful net zero transition. The recent Moody’s ESG Solutions report on the state of Taskforce for Climate-related Financial Disclosures (TCFD) found that of 3,800 companies assessed, the global average disclosure rate across all  11 TCFD recommendations was 22%. Only 13% of companies disclose conducting scenario analysis and the potential impact on their business – information which is critical to enable engagement on climate transition and resilience strategies.

Andrea Blackman, Managing Director and Global Head of ESG,  Moody’s ESG Solutions Group, participated in a panel discussion on the plenary stage at Climate Action’s Sustainable Innovation Forum. The session, titled: Paving the way for SMEs towards Net Zero Pathways, considered the divergence between large and small-to-mid-sized companies when it comes to the adoption of net zero targets. Andrea emphasised that there is an incredible opportunity for SMEs looking to adopt net zero pathways, as the process of doing so can help them improve their own resilience, competitiveness, and de-risk existing customer relationships.  

To learn more about which sectors and companies are best positioned for a rapid transition to net zero, join us at Moody’s ESG Summit on 30 November 2021. The Summit will feature a discussion on the significant and diverging impacts on transition readiness as critical carbon-intensive sectors undergo rapid transformation.

You can register to attend Moody’s ESG Summit here.