Our concern with the very encouraging charts below is that it is easy to join the group today, as there is no requirement to have a granular plan as to how you achieve net-zero. Many of the companies on the list may have the best intentions, but to get to their targets many need technology advances that are at best in laboratories today, and many need pricing structures – either incentives or penalties that make the right path forward more obvious. A lot of this does not exist today and the timeline to getting some of it done is being extended by political log-jams and differences of opinions. As time passes, the 100 or so companies that have signed the pledge are going to have to, at a minimum, explain what they are going to do and shortly thereafter, start committing capital.
Source: BloombergNEF, Climate Action 100+, Bloomberg, September 2021
Source: BloombergNEF, Climate Action 100+, Bloomberg, September 2021
Separately, but related, we have had an unusual number of corporate conversations over the last week and our calendar is filling up. While much of what we are discussing is subject to NDAs, a couple of themes are emerging. One is access to capital and the very large pool that is available to anything with an ESG angle, and the very limited pool available to proposed projects/investments without an ESG angle. Projects with very high potential IRRs are not finding funding. The second is a growing expectation that it is going to be hard to build further capacity for traditional chemicals and plastics without a carbon plan going forward – this is something we will address in more detail in our Sunday report to be found here.
