Global utility companies, usually seen as some of the worst culprits in terms of climate transition and achieving future net zero carbon emissions, are actually playing a significant role in promoting a more environmentally friendly global impact across industries, as per new research from Morningstar Sustainalytics.
In its first Low Carbon Transition Rating Industry Report, focusing on Utilities, Morningstar Sustainalytics Associate Director of Climate Research Pustav Joshi examines this sector and the involvement of utility providers in the global climate transition.
The evaluation, which covers 328 of the largest utility companies worldwide including electric utilities, gas utilities, independent power production and traders, multi-utilities, renewable power production and water utilities, portrays an industry sector that is currently “considerably misaligned” with the net zero by 2050 objective, but is increasingly crucial in the global carbon transition. According to Joshi, utilities are introducing more renewable energy generation capacity to industries traditionally focused on carbon, gradually reducing the energy intensity of generated power. Indeed, based on the IEA's findings, annual global investment in renewable energy such as solar energy might already be surpassing investments in fossil fuel energy.
Pustav Joshi – Associate Director, Climate Research, Morningstar Sustainalytics:
“The perception of global utilities as major global polluters, combined with their increasingly vital role in transitioning to a low-carbon global economy, highlights the complex aspects to consider when tackling a dynamic and multi-faceted issue like climate change. Our climate analysis and in-depth industry examinations assist investors in setting aside some of the inherent misconceptions to gain a better understanding of the dynamics at play across sectors on the path to net zero.”
