Measuring corporate Paris Compliance using a strict science-based approach

The achievement of the Paris Agreement climate goals of well-below 2 degrees of warming requires companies to align their greenhouse gas emission reductions with this goal. To measure whether companies are compliant with the Paris targets we propose several strict conditions that any emissions allocation methodology must meet before it can be classified as Paris-Compliant. Our conditions focus on the need for a common, and early as practicable, base year for all companies and consistency with an underlying Paris-aligned decarbonisation pathway. Additionally, we propose four operationalisation requirements to ensure companies can declare they are on a Paris Compliant Pathway including calculations of their carbon budgets and re-alignment pathways. Applying example Paris-Compliant Pathways and associated metrics to ten high emission electric utility companies and ten cement companies, we find that all but one of these companies are not currently Paris-compliant, with every year of delayed action increasing their required rate of decarbonisation and hence the exposure of billions of investment dollars to transition risk. Applying this proposed method will ensure the Paris carbon budget is met and that progress can be tracked accurately - an imperative for any companies and stakeholders seeking to align their decision-making with the Paris Agreement.

S. Rekker, M. C. Ives, B. Wade, L. Webb, C. Greig