Fund manager Ecofin last week put out an excellent summary note calledClimate action: The ripple became a swell and real progress is underway”. It’s an excellent precis for any investor and well worth a read. It also reminds us that we are collectively making real progress in controlling carbon emissions despite the protestations of Greta and her friends.

I’ll touch again on the climate alarmism tomorrow in discussing the excellent book Apocalypse Never by Michael Shellenberger, focusing on the need for a quantum increase in nuclear power. But for now the key point is that we don’t need to a) stop capitalism or b) stop all international travel (except by train) or c) turn the clock back to some rural distant past to control carbon emissions. It’ll be hard work as the chart below from Ecofin shows to keep the increase to the optimistic level of 2.8 degrees Celsius and even harder work to get to a 1.5 degrees level. But it is possible.

And it is certainly the case that more and more corporates get the message. The second chart, also from the Ecofin report, shows that in the listed universe of corporates, many if not most have already committed themselves to emissions reductions targets. The most ambitious targets are those consistent with the Paris Aligned Benchmarks (PAB) which encourages companies tor educe their carbon emissions by 7% year on year.

However, as a report on ETF Stream by Tom Eckett points out, there is a challenge. You can read the article here –

The article highlight analysis by Scientific Beta which reminds us that these PAB targets exclude carbon emissions from Scope 3. Scope 3 emissions include all other indirect emissions from activities of the organisation, occurring from sources that they do not own or control.

According to Tom’s report “Scientific Beta said in a letter to the European Commission: “[Scope 3] emissions are larger than the sum of direct (Scope 1) and energy-related indirect (“Scope 2”) emissions by an order of magnitude in most sectors.” Therefore, a company can still be included in the products even if its Scope 3 carbon emissions does not decrease by the 7% YoY as expected for Scope 1 and 2 emissions.”

The challenge here is obvious. By avoiding Scope 3 emissions corporates will suddenly face an avalanche of negative publicity form capitalist hating deep red greens who will simply fall back on their conventional narrative – corporates are part of the problem and cannot be trusted. These Scope 3 loopholes are ammunition for pessimists and apocalypse believers who would rather fixate on utterly unattainable goals that will simply fuel societal strive and chaos. Better to close the loop holes now and challenge corporates to be even more ambitious.