Climate change: Asian firms must accelerate decarbonisation efforts to catch up with global warming targets, Morningstar Sustainalytics says

Companies in Asia-Pacific must step up their decarbonisation efforts as their current trajectory would cause the world to warm by close to 3 degrees celsius, according to sustainability data and ratings provider Morningstar Sustainalytics.

Included in its coverage of 4,000 mostly listed, medium- and large-sized companies from across the world are 1,650 Asia-Pacific entities under its “low carbon transition rating” assessment. The region’s average transition score is similar to the global average of 2.9 degrees, said Nick Cheung, CEO of Morningstar Asia.

“This is quite concerning,” he told the Post in an interview. “Based on the way these companies are managing their carbon emissions, we don’t see how the world can achieve the 1.5 degree target as committed by nations under the Paris Agreement. If industries do not step up their decarbonisation efforts, this target is almost meaningless.”

The rating, and the analysis provided in reports, are often used by asset management companies for creating investment fund products with climate mitigation and sustainability themes. Such considerations are even more pertinent at a time when greenwashing, the act of making unsubstantiated sustainability claims, has become an issue for regulators as funds with environment, social and governance themes gained popularity.

The implied global warming trajectory as indicated by Morningstar’s ratings of the 4,000 companies excludes the impact of small companies which typically make up the bulk of businesses in most economies. This is a cause for worry.