This report outlines pathways and policies to transition to 1.5°C. The report discusses the strengths and limitations of energy/climate models while analysing key uncertainties surrounding carbon dioxide removal and carbon capture and storage technologies. Governments should regulate the long-term targets of the corporate sector and should better set up mandatory requirements to companies’ reporting methodologies to satisfy the need for corporate climate reporting. Corporate accountability is instrumental to channel capital to accelerate energy transitions.

The report suggests that investors have a critical role to play in driving the energy transition to net-zero, identifying areas of risk and opportunity to deploy capital as needed. It reveals that several reporting initiatives are in motion but lack regulatory alignment. European countries lead the way in mandating corporate climate disclosures, and governments must introduce similar policies to make material disclosures available throughout the reporting framework across all countries. Standardised material information and consistent disclosure practices are required to ensure climate targets are met and companies do not greenwash.

ESG Issues

• Environmental: Transitioning to renewables and the need to phase-out oil and gas; net-zero goals; governance and accountability within companies to adhere to policies and regulations
• Social: Interplay between legal and economic challenges in energy transitions
• Governance: Corporate regulatory policies, mandatory reporting, and transparency

Recommendations

• Governments need to regulate long-term targets of corporates and enforce mandatory company reporting methodologies practices.
• Investors need standardised disclosures and mandatory national and international policies in place.
• Regulation needs to align definitions with voluntary initiatives.
• Corporate accountability is crucial to investors’ engagement and efforts to channel capital to accelerate the energy transition to net-zero.