Corporates must double green investments to meet net zero target
Europe’s largest companies must double their low-carbon investments if they are to meet the EU’s new target of net zero emissions by 2050, CDP has found.
In a report published yesterday, CDP revealed that European corporations spent €124bn (£104bn) on new low-carbon capital investments and research and development last year.
This is set to deliver at least 2.4 gigatons of lifetime emission savings – more than the annual emissions of the UK, Germany, France, Italy and Poland combined – while adding €40bn to bottom lines.
However, the researchers warned that they must double their low-carbon share of capital expenditure from 12% to 25% to be consistent with the EU’s new net zero target.
“European companies are making significant investments in transformational low-carbon technologies that can help the EU deliver its climate neutrality target by 2050,” said Steven Tebbe, managing director of CDP Europe.
“But overall, current investment levels are still short of putting European firms on track for net zero emissions. The business case for transitioning businesses onto a low-carbon pathway is clear, and the opportunities vast.”
The companies analysed have annual emissions equivalent to three-quarters of the EU total, and represent approximately 76% of European market capitalisation.
CDP said they could capture €1.22trn in value through new low-carbon opportunities like higher demand for electric vehicles and green infrastructure – six times the investment cost of €192bn.
Construction company ACS Group has said that it sees an €11bn opportunity in green building and infrastructure projects, for example.
Volkswagen expects that, by 2025, battery-electric vehicles will make up 25% of expected annual sales, representing a financial opportunity of €59bn.
Meanwhile, EON foresees seven to 10 million electric vehicles in Germany by 2030, representing a €12bn opportunity from charging infrastructure, hardware and software solutions.
However, the researchers also found that less than 1% of the total low-carbon investment in Europe was used for developing carbon, capture, utilisation and storage (CCUS) and hydrogen technology last year.
"For industries where decarbonisation is more challenging, there is a serious need for financial markets and policymakers to create better conditions for low-carbon investment and deliver stronger incentives to drive investment into breakthrough technologies, where capital expenditure is often high and returns long term," Tebbe added.
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Chris Seekings is a reporter for TRANSFORM