Major UK firms on course for ‘disorderly’ green transition
Major UK companies are making progress on cutting greenhouse gas emissions – but a steep change is needed to meet international climate goals, according to a new report.
Experts from the University of Exeter and J O Hambro Capital Management have jointly developed a new probabilistic forecasting model, Horizon, which is used to project emissions from UK-listed firms from 2025 to 2050.
The model forecasts a period of emissions “plateauing” until about 2032, followed by a reduction from 350 million tonnes of CO2 equivalent to approximately 115 million tonnes in 2050 – about one third of current levels.
While this progress is substantial, it remains insufficient to meet the net zero pathway needed to limit warming to 1.5°C, placing the UK on track for a “disorderly” transition and exposing the UK economy to heightened risks.
“UK firms are performing reasonably well, but our analysis shows that accelerated action is needed,” said Nikolaos Dimakis, Senior Data Scientist at J O Hambro.
“The research shows that just a few sectors – Energy Minerals, Process Industries, and Transportation – are responsible for 88% of total UK corporate emissions.
“It also reveals that 88.7% of their emissions are generated overseas, underscoring the global footprint of UK businesses and their supply chains.”
He added: “The UK accounts for a small proportion of global emissions, but we have a significant influence – and we also have a responsibility to play our part and lead by example.
“UK-listed companies do business around the world, so they can be agents of change worldwide.”
The UK has already reduced its onshore emissions by about 50% since 1990, largely due to renewable power – which now accounts for more than half of UK electricity generation.
Economic benefits
The report examined emissions pathways and linked these to different global warming scenarios – ranging from a “hot house world” with severe climate-related damage, to an “orderly” transition to net zero by 2050.
Dr Jesse Abrams, from Exeter’s Green Futures Solutions team, said: “Our findings have significant implications for policymakers, corporate leaders, investors and consumers.
“The gap between current trajectories and the most ambitious ‘Net Zero 2050’ pathway is particularly concerning given the risk of climate tipping points – critical thresholds where small changes can trigger large, irreversible shifts in Earth systems, and could accelerate warming beyond what current models predict.
“Delayed climate action can result in much higher costs in future. As climate impacts become more severe, the expenses related to adaptation and mitigation will increase.
“Conversely, proactive measures can reduce these long-term costs, such as damage to infrastructure, increased insurance premiums, and health-related risks.
“Early investment in sustainable technologies and practices can also create new market opportunities and enhance competitiveness, giving market-leading firms a positive reputation with consumers and securing long-term investor confidence.”
The report assessed 347 firms, representing 89% of the total market capitalisation (value) of the UK’s listed companies and spanning 20 industry sectors, including Transport, Oil and Gas, Technology and Finance.
The Horizon model used in the study only looks at evidence of decarbonisation, ignoring stated ambitions, to forecast future trends and the resulting risks.
The report only assessed scope 1 and 2 emissions – as data on scope 3 (indirect emissions across a company’s value chain) is poorly reported and inconsistently disclosed, limiting their reliability for comprehensive analysis. Scope 3 emissions often represent a significant portion of a company’s total carbon footprint and should be urgently addressed through enhanced reporting and regulations.
The report is available at: https://greenfuturessolutions.com/news/corporate-emissions-report-exeter-johambro/
This report was delivered in collaboration between J O Hambro Capital Management and the University of Exeter’s Green Futures Solutions team, who develop expert-informed solutions to the climate crisis.
From June 30 to July 4, the University of Exeter will host the Exeter Climate Forum – a major gathering of scientists, policy makers and business leaders to discuss growing risks from climate change, and action to address it.
