Europe’s top companies ‘must double low carbon investment for net zero’

The report: Doubling down: Europe’s low-carbon investment opportunity, was jointly published by the Carbon Disclosure Project (CDP), an environmental reporting firm, and consultancy Oliver Wyman. It analyses the low carbon investments of 882 companies – which make up over 70% of European market capitalisation – to assess whether their investment patterns are consistent with net zero. 

The report finds that the companies allocated €59bn to low carbon capital investment in 2019. But in order to meet the European Commission’s new targets, investment would have to more than double to around €122bn per year. In terms of overall capital expenditure, low carbon investment would need to increase from 12% to 25%. 

Key sectors for capital investment and research and development (R&D) were the carbon-intensive transport, energy and materials sectors, accounting for 50%, 38% and 5% of the total respectively. Capital investment was driven by electric utility investments of €45bn in renewables, infrastructure and enabling technologies, such as demand side response programmes and digitalisation. 

Meanwhile, R&D investments amounted to €65bn, of which €43bn was reported by the transport sector, primarily for investments in electrification and autonomous vehicle technologies. 

According to the report, the companies’ 2019 investments are expected to deliver at least 2.4 gigatonnes of CO2 equivalent in terms of lifetime emissions savings – more than the annual CO2 output of the UK, Germany, France, Italy and Poland combined. The potential value of new low carbon business opportunities is €1.2tn – over six times the cost of the investment needed to realise them. 

‘Across many types of investment, the business case for transitioning businesses onto a low carbon pathway is clear, and the opportunities vast,’ says 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.’