Taking stock: Is 1.6°C the new 1.5°C?

Is 1.6°C the new 1.5°C?

The MSCI Sustainability Institute and its collaborators are pursuing initiatives to drive the immediacy of climate action across capital markets

The COP28 climate conference will emphasize the need for ambitious action by governments and the private sector to stave off the worst impacts of global heating. Investors and other capital-markets participants have a critical role to play in spurring companies to eliminate greenhouse gases. The Institute is teaming up with collaborators on a series of initiatives designed to help achieve that aim.

The share of listed companies that have published a decarbonization target has increased to 48%, as of May 31, 2023, up from 27% three years ago.1“The MSCI Net-Zero Tracker, July 2023 update.” MSCI ESG Research, July 2023. Still, listed companies are on track to warm the planet 2.5°C above preindustrial levels this century.2See note 1

The ambition gap: One-fifth (22%) of listed companies align with a 1.5°C pathway

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Paris AgreementMSCI ACWI Investable Market Index ITR
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ADR","Nike Inc","Sony Group Corp"],["Amazon.com, Inc.","Tesla Inc","Home Depot Inc","Lowe's Companies Inc","Starbucks Corp"],["TJX Companies Inc","Compagnie Financiere Richemont SA","Meituan","Hermes International SCA","Mercedes Benz Group AG"],["Toyota Motor Corp","O'Reilly Automotive Inc","Autozone Inc","Hilton Worldwide Holdings Inc","Aptiv PLC"]], "Consumer Staples":[["Procter & Gamble Co","Philip Morris International Inc.","Unilever plc","L'Oreal SA","Diageo plc"],["Nestle SA","PepsiCo, Inc.","Walmart Inc","Estee Lauder Companies Inc","Danone SA"],["Coca-Cola Co","Costco Wholesale Corporation","Mondelez International Inc","General Mills Inc","Monster Beverage Corp"],["Alimentation Couche-Tard Inc","Kraft Heinz Co","Lamb Weston Holdings Inc","Bunge Ltd","China Mengniu Dairy Company Limited"]], "Energy":[["SK Innovation Co Ltd","Gaztransport et Technigaz SA","TGS ASA","Liberty Energy Inc","Nextier Oilfield Solutions Inc"],["Shell PLC","TotalEnergies SE","Schlumberger NV","Eni SpA","Baker Hughes Co"],["Reliance Industries Ltd","Targa Resources Corp","PTT Public Company Limited","OMV AG","Southwestern Energy Co"],["Exxon Mobil Corp","Chevron Corporation","ConocoPhillips","BP plc","Enbridge Inc"]], "Financials":[["Bank of America Corp","Wells Fargo & Co","HSBC Holdings plc","Royal Bank of Canada","S&P Global Inc"],["JPMorgan Chase & Co","AIA Group Ltd","Morgan Stanley","UBS Group AG","ICICI Bank Ltd"],["Mitsubishi UFJ Financial Group Inc","BNP Paribas SA","China Construction Bank Corporation","Bank of Nova Scotia","Bank of Montreal"],["Brookfield Corp","Lloyds Banking Group PLC","Industrial and Commrcl Bank of China Ltd","Skandinaviska Enskilda Banken AB","Mega Financial Holding Co Ltd"]], "Health Care":[["UnitedHealth Group Inc","Merck & Co Inc","Novo Nordisk A/S","AstraZeneca plc","Pfizer Inc."],["Johnson & Johnson","Eli Lilly And Co","AbbVie Inc","Roche Holding AG","Thermo Fisher Scientific Inc"],["Abbott Laboratories","Medtronic PLC","Stryker Corp","Becton Dickinson and Co","HOYA CORPORATION"],["Intuitive Surgical, Inc.","DexCom, Inc.","Resmed Inc","Insulet Corporation","Fisher & Paykel Healthcare Corporatn Ltd"]], "Industrials":[["Siemens AG","Schneider Electric SE","Uber Technologies Inc","Emerson Electric Co","Deutsche Post AG"],["Rtx Corp","United Parcel Service, Inc.","Airbus SE","Waste Management, Inc.","CSX Corporation"],["Union Pacific Corp","Deere & Company","Canadian Pacific Kansas City Ltd","Canadian National Railway Company","ABB Ltd (ADR)"],["Honeywell International Inc","Boeing Co","General Electric Co","Caterpillar Inc.","Lockheed Martin Corp"]], "Information Technology":[["Apple Inc","Microsoft Corp","Taiwan Semiconductor Manufacturng Co Ltd","Visa Inc","Mastercard Inc"],["Broadcom Inc","Advanced Micro Devices, Inc.","KEYENCE CORPORATION","Analog Devices, Inc.","Synopsys Inc"],["NVIDIA Corp","ASML Holding NV","Samsung Electronics Co Ltd","Texas Instruments Inc","Intel Corporation"],["Applied Materials, Inc.","BE Semiconductor Industries NV","Universal Display Corporation","Xinyi Solar Holdings Ltd","Fabrinet"]], "Materials":[["Ecolab Inc","Newmont Corporation","Dsm BV","Reliance Steel & Aluminum Co","FMC Corp"],["Glencore PLC","Dow Inc","Holcim AG","Nucor Corporation","Vulcan Materials Company"],["L'Air Liqud Soct Ae pr l'Edeetl'EndsPsGe","Sherwin-Williams Co","Freeport-McMoRan Inc","Sika AG","Corteva Inc"],["BHP Group Ltd","Rio Tinto plc","Air Products & Chemicals, Inc.","Shin-Etsu Chemical Co Ltd","Vale SA"]], "Real Estate":[["Prologis Inc","American Tower Corp","Crown Castle Inc","SBA Communications Corp","Mitsui Fudosan Co Ltd"],["Equinix Inc","Public Storage","Realty Income Corp","Simon Property Group Inc","VICI Properties Inc"],["CBRE Group Inc","Ke Holdings Inc","Wharf Real Estate Investment Company Ltd","Americold Realty Trust Inc","Capitaland Investment Ltd"],["Zillow Group Inc","Rayonier Inc","Potlatchdeltic Corp","Corporate Office Properties Trust","Re/Max Holdings Inc"]], "Utilities":[["Iberdrola SA","Enel SpA","Edison International","SSE PLC","Entergy Corp"],["Duke Energy Corp","National Grid plc","American Electric Power Company Inc","Dominion Energy Inc","American Water Works Company Inc"],["NextEra Energy Inc","Southern Co","Consolidated Edison, Inc.","WEC Energy Group Inc","Constellation Energy Corp"],["Sempra","Exelon Corp","Xcel Energy Inc","Public Service Enterprise Group Inc.","PG&E Corporation"]] } }

*Estimate is based on MSCI's Implied Temperature Rise metric, which estimates the rise in average global temperatures if the whole economy had the same carbon-budget overshoot or undershoot as the company or portfolio in question.

Source: MSCI ESG Research, data as of May 31, 2023.

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