9 out of 10 companies still haven’t committed to a net zero target

9fin, the leading leveraged finance (levfin) intelligence platform, has published a comprehensive report on ESG within levfin alongside its new ESG Company Data product launch. The report has highlighted how companies are not focused on SBTi-aligned climate targets and commitments with the vast majority (89%) of companies still not committed to a net zero target under the Science Based Targets initiative (SBTi). Additionally,68% haven’t committed to a near-term target and 96% to a long-term target.

Net zero by 2050 is a common target that many countries and companies have committed to. However even the UK government is facing a high court ruling to draw up a new plan for how it will reach the target and, as 9fin’s ESG team explained in a recent webinar, the term itself is often used loosely when ‘carbon neutral’ may be more accurate for companies only targeting a portion of their emissions or relying on carbon offsets to reach their goals.

SBTi targets define and promote best practices in science-based target setting, including near-term, long-term and net-zero targets. Although the organisation has increasingly been scrutinised for its methodology, and the quantity of target verification it undertakes, it’s still one of the most credible ways to assess whether a company’s goals are science-based.

The remaining 11% of companies have committed to a net zero target according to the intelligence platform ESG report, however, none of the firms in the report have had their long-term or net zero targets verified by the SBTi.

Proportion of issuers having SBTi commitments and targets

To date, ESG disclosure from leveraged finance issuers has generally lagged behind their investment-grade counterparts. The report has highlighted that LevFin companies are reporting fewer than 5 of 11 (45%) key ESG data points.

The report comes ahead of new legislation which will impact Financial Market Participants (FMPs), including asset managers, banks and fund brokers. As of December 2022, the Sustainable Finance Disclosure Regulation (SFDR) is set to enforce the mandatory disclosure of 14 data points known as the Principal Adverse Impact (PAI) indicators.

The intelligence provider has analysed thousands of sources to build a data product that offers standardised ESG information, including the ability to trace key data points back to their original source.

Steven Hunter, 9fin co-founder & CEO, commented: “Leveraged finance companies are behind the curve on net zero targets, and our report demonstrates there is still a long way to go for them to be aligned with a sustainable future.

We know there is a huge demand for greater transparency and information in this growing area, and we are delighted to work with our stakeholders across the levfin community to address this with our ESG Company Data.”