2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReportOctober20222022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport2TableofcontentsTableofcontents2The2022ClimateandEnergyBenchmarkontheTransportSector3Fivekeyfindings6Keyfinding1:Eventhoughoverhalfoftheassessedtransportcompanieshavesetlong-termnet-zerotargets,theirlow-carbontransitionplanslackdetail,depthandintermediatetargets.ThislimitssufficienttrackingoftheirprogresstowardstheParisgoals.6Keyfinding2:Transportcompaniesarenotusingenoughoftheirexpertiseandindustryplatformtodrivekeystakeholderstotransitioninlinewiththe1.5°Cgoal.Theyneedtotakedecisiveleadershiptowardsreachingtheclimategoals,insteadofrelyingonotherstakeholdersforsolutions.9Keyfinding3:Currentresearchanddevelopmentinvestmentsinemerging,unproventechnologiesandnewbusinessmodelsinthetransportsectorwillnotclosetheemissionsreductiongapintime.12Keyfinding4:Thevastmajorityoftransportcompaniesmustacceleratenecessaryactionimmediatelytomakethelow-carbontransitionjustandequitable,topreventplacingaworkforceofmillionsatrisk.14Keyfinding5:Onlyaminorityoftransportcompaniesdemonstrateeffectivehumanrightsduediligence–withoutadequatepriorityforhumanrightsanddecentworkpractices,ajusttransitionwillnotbepossible.17Sub-sectorfindings19Aviation19Shipping20Road21Rail23Multimodal24AbouttheWorldBenchmarkingAlliance262022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport3The2022ClimateandEnergyBenchmarkontheTransportSectorWearerunningoutofroad.Withouturgentactiontolimitclimatechange,theworldwillexperiencemoreextremeweatherevents,riseinsealevelsandnegativeimpactsonbiodiversity,ecosystemsandoceans.TheIPCC’s2022SixthAssessmentReport:Impacts,AdaptationandVulnerabilityshowsthatglobalwarming,exceeding1.5°Cinthecomingdecades,willcauseincreasesinclimatehazardsandpresentamultitudeofriskstoecosystemsandhumans.Thesewillhaveadisproportionateeffectonthepoorestandmostvulnerablepopulationsfordecadestocome.In2015,196countriessigneduptotheParisAgreementforclimateaction.Inthesameyear,193countriescommittedtotheUNSustainableDevelopmentGoals(SDGs).However,theworldstillneedsamajordecarbonisationandenergytransformationifwearetoalignglobaleffortstoachievethegoalssetoutintheParisAgreementandpreventtheworstimpactsofclimatechange.Thesegoalsincludelimitingglobalwarmingto1.5°C.Moreover,effortsneedtobecarriedoutinajustandequitableway,sothatnooneisleftbehind.Yet,evenafterthe10thanniversaryofthepublicationoftheUnitedNationsGuidingPrinciplesonBusinessandHumanRights(UNGPs),companiesarestilllaggingonduediligenceprocesses.Toaccelerateactiontowardsajustglobaldecarbonisationandenergytransformation,theWorldBenchmarkingAlliance(WBA)hasformedastrategicpartnershipwiththeAssessinglow-CarbonTransition(ACT)initiativedevelopedbyADEME,theFrenchAgencyforEcologicalTransition.ACThasbeenco-developedwithCDP,theworld’senvironmentaldisclosureplatform.WBAiscontinuingtoworkinpartnershipwithCDPtoapplyACTassessmentsfortheWBAClimateandEnergyBenchmark.TheWBAClimateandEnergyBenchmarkassessescompaniesincriticallyhigh-emittingsectors.Itaimstoassess450companiesby2023.TheTransportsector1isthelatestintheClimateandEnergyBenchmarkseries(followingAutomotive,ElectricUtilitiesandOilandGas).Transportiscriticaltoachievingglobaldecarbonisation:ithasthehighestrelianceonfossilfuelsofallsectors.In2021,transportaccountedfor37%ofCO2emissionsamongallend‐usesectors.IntheUS,thetransportsectoraccountedfor27%oftotalgreenhousegas(GHG)emissionsin2020,thehighestofanysector.InChina,transportaccountedfor10%oftotalGHGemissionsin2021,withthesharegrowingrapidly.TheParisAgreementservesasanaccountabilitymechanismforstates,astheyneedtoreporttheprogressontheirnationalclimateplansundertheUNFrameworkConventiononClimateChange(UNFCCC).WBA’sClimateandEnergyBenchmarkaimstoprovideanaccountabilitymechanismforcorporatenon-stateactors,specificallykeycompaniesinhigh-emittingsectors,totracktheirprogressandcontributionstotheParisAgreementgoals.WBA’sACTassessmentstrackcompanies’low-carbon1Automobilesareexcludedfromthe2022TransportBenchmark,buttheywerecoveredbytheWBA2021AutomotiveBenchmark.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport4transition,andthesocialassessmentstrackwhethertheyaretransitioninginajustandequitableway.Detailsofhowweintegratethetwoassessmentscanbefoundinourlatestmethodologyreport.Inthisway,thebenchmarkassessesandrankshigh-emittingcompaniesontheircontributionstoajustlow-carbontransition,whichincludesrespectforhumanrightsthroughaduediligenceprocess.Weengagecompaniesthemselvesintheprocessoftheassessmentsandonthefindings.Wearealsocontinuingtoexplorewaystotracktheprivatesector’scontributiontoadaptation,accesstoenergyandlossanddamage.TheTransportBenchmarkassesses90keystonetransportcompaniesthathaveadisproportionateinfluenceonachievingtheParisAgreementgoalsandtheSDGs2.InlinewiththescopeoftheACTmethodologyandavailabledecarbonisationscenarios,thisbenchmarkcoversfreightandpassengercompaniesacrossair,railandroad,aswellasseafreight(shipping)transportcompanies.Thebenchmarkdoesnotcoverseapassengertransportcompanies.ThisbenchmarkisthefirstofWBA’sClimateandEnergyBenchmarkseriesthatcombinestheACTassessmentandthejusttransitionandsocialassessmenttoprovideanoverallscoreandranking.Byconsideringsocialanddecarbonisationissuestogether,thebenchmarkcanmobilisestrongeractionneededtoholdcompaniesaccountableoncontributingtowardsalow-carbontransitionthatleavesnoonebehind.Thecompaniesinthisbenchmarkplayavitalroleinoursocietiesandglobaleconomy,connectingtheflowofpeopleandgoodsacrosscountriesandaroundtheworld.Transportcompaniesareheavilyreliantonothersectorsfortheirlow-carbontransition:thesectorismoreexposedtotheoilandgasindustrythananyother,withmorethan90%ofitsenergycomingfromcrudeoil-derivedproducts.Collaborationacrosssectorsisneededtoscaleuptheuseofsustainablefuels.Transportcompaniesalsoneedmanufacturerstosupplylow-carbonvehicles,andtheyneedinfrastructure(suchaschargingstations)tooperatethesevehicles.Freightcompaniesarealsocriticalforfunctioningofsupplychains–highlightedin2021whenacontainershipranagroundintheSuezCanal,haltinginternationalfreightmovementonthiskeyshippingcorridor.ThesectorwasalsoheavilyimpactedbyCOVID-19andgeopoliticalshiftswithinternationalconflictshaveaffectedcompaniesandstakeholdersinvariousways.Nonetheless,theclimatecrisismustcontinuetobeaddressed.Furthermore,in2022,aspeoplewiththemeanstotravelarereturningtousingaviationandlong-distancerailandroadtransport,socialchallengesforworkersinthesectorhavecometotheforeandinWesternEurope,strikeshavebecomewidespread.Theimperativeofajustandequitablelow-carbontransitionhasneverbeenmorepressinginthetransportsector.Thisreportpresentsthefivekeyfindingsfromthebenchmarkresults,aswellasadeeperdiveintofindingsacrosseachtypeoftransportmodeusedbytheassessedcompanies.Thefindingsaredesignedtoprovideinvestors,civilsocietyandpolicymakers–aswellasthecompaniesthemselves–withtheinsightstheyneedtotakeaction.WBA’smissionistobuildamovementtomeasureandincentivisebusinessimpacttowardsasustainablefuturethatworksforeveryone.Workingwith330+organisationsinourAlliance,weenvisionasocietythatvaluesthesuccessofbusinessbywhatitcontributestotheworld.Toachievethis,weneedallactorsintheecosystemtodrivetheneededtransformations.253%(32)ofthepubliclylistedcompaniesinTransitionPathwayInitiativeand83%(5)ofthepubliclylistedcompaniesintheCA100+NetZeroCompanyBenchmark(bothcomprisingairlinesandshippingcategories)areassessedintheWBAClimateandEnergyBenchmarkontheTransportSector.TheCA100+NetZeroCompanyBenchmarkpublisheditslatestresultson13October2022.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport6FivekeyfindingsThe2022ClimateandEnergyBenchmarkontheTransportSectorshowsanindustrywithanillusionofprogress:companiesreportmanytargetsandcommitmentstonetzero,withoutthenecessarydetails,financialclarityandcollaborativeactionneededtoturnlow-carbontransitioncommitmentsintoaction.Transportcompanies’activitiesareallaboutconnectingpeopleandgoodsgeographically.Theyneedtoshowleadershipinconnectingandcollaboratingwithothersectorsandstakeholderstoenablethelow-carbontransitionandalignmentwiththe1.5°Cgoal.ItisnotimpossibleforcompaniestogetasoundratingontheACTassessment:evidencefromtheTransportmethodologyroadtestshowsthatthebestscoreachievedinthatpilotassessment,usingpublicandprivatedata,was12A+.Thefindingsalsoshowthatoverall,onlyaminorityoftheassessedcompaniesareengagedwithajusttransition,ifundertakingalow-carbontransitionatall.Aswiththelow-carbonassessment,companiesdemonstratesomecommitmentbutlittleactioninrelationtothesocialimpactsofthetransition.Ajusttransitionrequiresurgentattentionfromcompaniesandpolicymakers.Aconcertedeffortisneededtobringpeoplealonginthetransformation.Lackofactionbycompaniescouldarguablyriskthesuccessofthelow-carbontransitionandcouldleadtoincreasedinequality,massunemploymentandcivilunrest.Keyfinding1:Eventhoughoverhalfoftheassessedtransportcompanieshavesetlong-termnet-zerotargets,theirlow-carbontransitionplanslackdetail,depthandintermediatetargets.ThislimitssufficienttrackingoftheirprogresstowardstheParisgoals.51%(46)ofthe90companiesinthebenchmarkhavesetnet-zerotargets.Fouroutof90have1.5°CtargetsvalidatedbytheScienceBasedTargetsinitiative(SBTi).However,manyofthecompanieslackinterimtargetsanddetailsintheirlow-carbontransitionplans,whicharenecessarytodemonstrateacrediblepathtoachievingtheircommitments.Ofthecompanieswithnet-zerotargets,50%(23)havenotconductedscenarioanalysis,65%(30)donotincludeanyfinancialdetailsintheirtransitionplansand87%(40)havenotsetanytargetsbetween2030andtheirtargetednet-zeroyear.Companiesneedtobackuptheircommitmentswithdetailedroadmapsshowinghowtheywillmoveforwardona1.5°C-alignedpath.Theroadahead:mostcompanieshavetargetsbutneedmoredetailTransportcompaniesarerespondingtotheexpectationthattheyshouldsetnet-zerotargets:justoverhalf(51%)ofthe90companieshavesetone.Bycomparison,our2021findingsshowedthat52%ofthecompaniesinWBA’sElectricUtilitiesBenchmarkhadsetnet-zerotargets,whileonly22%ofcompaniesintheOilandGasBenchmarkand17%ofcompaniesintheAutomotiveBenchmarkhaddonethesame.Themajorityofthetransportcompaniesareaimingtoachievenetzeroby2050,and11companieshavesetthistargetforearlier.However,onlytenofthecompanieshavecommittedtoachievingnet2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport7zerowithouttheuseofcarbonoffsets.Mostofthecompanieshavenotclearlysetouthowtheyplantoachievetheirtargets,whichunderminesthecredibilityoftheirambitions.Onlyeightofthecompanieswithnet-zerotargetshavesetmorethanoneintermediatetargetbetweennowandtheirtargetednet-zeroyear,andonlysixhavesetanytargetsbetween2030andtheirnet-zeroyear:AmericanAirlinesGroup,FirstGroup,MediterraneanShippingCompany,RoyalMailplc,UnitedAirlinesandGo-AheadGroup.Thisisacrucialperiodforemissionsreductionsifthesecompaniesactuallyexpecttoreachnetzeroby2050orearlier.Thelackoftargetsforthisperiodraisesquestionsabouthowthecompaniesplantoachievetheirlong-termtargetsandcastsdoubtontheirabilitytoachievethegoalstheyhavesetintheirtransitionplans.Noneofthecompanieshassetintermediatetargetsspacedatregulargapsofnomorethanfiveyears.Settingregularlyspacedinterimtargetsiscrucialasitincreasesthecredibilityofacompany’slow-carbontransitionplanningandincentivisesshort-termactiontowardslonger-termgoals.Thecoverageofthecompanies’targetscanalsobestrengthened:only19%ofalltheassessedtargetscoverscope1,2and3emissions.Further,only29%(26)ofthe90companiesdisclosesufficientdatatoassessalignmentwiththeir1.5°Cpathway.Ofthesecompanies,13werefoundtohavetargetsfullyalignedwiththeir1.5°Cpathway.Additionally,11ofthe90companieshavehadtheirtargetsvalidatedbytheSBTi,butonlyfourofthesehavesettargetsinlinewith1.5°C.However,afurther17companieshavecommittedtohavingtheirtargetsvalidatedbytheSBTi,whichcanhelpthesecompaniessetrobusttargetsandbeheldaccountableforachievingthem.FIGURE1:TRANSPORTCOMPANIESONNET-ZEROGOALS2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport8FIGURE2:QUALITYOFNET-ZEROTARGETSOFTRANSPORTCOMPANIESReachingthedestination:low-carbontransitionplansshouldbestrongerDetailedlow-carbontransitionplanningthatincludesfinancialcommitmentsiscrucialtoensurethatacompany’slong-termtargetsarerealisticandachievable.Atransitionplanshouldoutlinehowanorganisationplanstoalignwitha1.5°Cworld.80%(72)ofthecompanieshaveelementsofatransitionplan;however,manyofthemlackdetailsandcommitments.Ofthe72companies,49providenofinancialdetailsrelatedtotheirtransitionplanningandthemajoritydonotincludeavisionofhowtheyrealisticallyexpecttheirlow-carbonbusinessmodelstooperateinthefuture.Manyofthesecompanieswillsoonberequiredtodisclosetransitionplans,forexample,undertheUKgovernment’snewSustainabilityDisclosureRequirements,thedisclosureframeworksdevelopedbytheEuropeanFinancialReportingAdvisoryGroup(EFRAG),theInternationalSustainabilityStandardsBoard(ISSB)andtheU.S.SecuritiesandExchangeCommission(SEC).Othermajoreconomies,suchasChina,arealsoincreasinglytighteningtheirrulesonsustainabilitydisclosurerequirements,withdomesticenterprisesandmajorcarbonemittersnowobligedtodiscloseaseriesofenvironmentalinformation.Companiesriskfallingbehindiftheydonotdevelopandreportadetailedtransitionplan.Low-carbontransitionplansshouldbeinformedbycompany-widescenarioanalysistoensuretheirambitionmatchesthatrequiredbya1.5°Cpathway.However,lessthanhalfofthecompaniesundertakingtransitionplanninghaveusedscenarioanalysis,andonlyfiveofthosecompanieshaveuseda1.5°Cscenarioandconsideredbothphysicalandtransitionrisks.Thereisacleargapbetweentheambitionofthetransportcompanies’targetsandthequalityoftheirtransitionplanning.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport9Nonetheless,therearecompaniesthatstandout,showingthatgoodpracticeispossible.ComfortDelGroCorporation(ranked1stoveralland1stontheACTassessment)hassetmultiple1.5°Caligned,SBTi-validatedtargets,coveringallitsemissions.Thecompanyhasalsodevelopedadetailedtransitionplaninformedbyscenarioanalysisanditsboardhasoversightofclimatechangeaswellassignificantexpertiserelatedtothelow-carbontransition.Keyfinding2:Transportcompaniesarenotusingenoughoftheirexpertiseandindustryplatformtodrivekeystakeholderstotransitioninlinewiththe1.5°Cgoal.Theyneedtotakedecisiveleadershiptowardsreachingtheclimategoals,insteadofrelyingonotherstakeholdersforsolutions.Passengerandfreightcompaniesplayacriticalroleinconnectingpeopleandsupplychainsacrosstheworld.However,thesecompaniesshowadisconnectedapproachwhenitcomestodrivingchangeamongtheothersectorsandstakeholdersthatareneededfortheirlow-carbontransition.66%(59)ofthe90assessedcompaniesdonotengagewithsuppliersonenvironmentalissuesbeyondintegratingclimatechangeissuesintothesuppliercodeofconduct.Asectorthatisallaboutconnectionneedstoshowleadershipincollaboratingwithothersectorsandstakeholderswhichwillenableitslow-carbontransition.Thecompaniesinthisbenchmarkplayacriticalroleinsocietyandtheglobaleconomybytransportinggoodsandpassengersandconnectingsupplychains.Theyalsorelyheavilyonothersectors–oilandgas,electricutilitiesandvehiclemanufacturers–andotherstakeholders,includingpolicymakersandcustomers,thatenablethelow-carbontransition.Theassessedcompaniesshowinsufficientevidenceofcollaborationwithothersectorsandstakeholderstoachievetheirdecarbonisationgoals.SupplierengagementThereisnocompanyinthebenchmarkthatscoresfullmarksforengagementwithmanufacturersorfuelproviders.Technologylimitationsmeanthatefficiencyimprovementsandalternativefuelsarecriticalforaviationandshippingtodecarbonise.Onlyfourofthe43assessedshippingandaviationcompanies–AmericanAirlinesGroup,HyundaiMerchantMarine,InternationalAirlinesGroupandJapanAirlines-showevidenceofcollaborationwithmanufacturersorfuelprovidersonlow-carbonvehicleresearchanddevelopment(R&D)thathasledtoareductioninemissions.Ofthe44companiesthathavesubcontractedactivities,23donothaveastrategyfordealingwithsubcontractors,andonlyonecompany(DeutscheBahn)hasaproventrackrecordofreducingsubcontractors’emissions.Further,17ofthe44companieshaveanet-zerotargetbutnoclearstrategyforreducingemissionsfromsubcontractedactivities.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport10FIGURE3:ASSESSEDCOMPANIESANDSUPPLIERENGAGEMENTPolicyandinfrastructureClimatepolicyatbothnationalandinternationallevelsisessentialtoenablethedevelopmentoflow-carbonsolutions,suchassuitableinfrastructure.Ofthe90assessedcompanies,41donotpubliclysupportdecarbonisationpolicies.Further,onlythreecompanies–A.P.Moller–Maersk,DeutscheBahnandMSCMediterraneanShippingCompany–showsufficientsupportforclimatepolicytobeassessedasbeingalignedwiththelow-carbontransition.Ifcompaniesfavourmarket-basedsolutions,engagementwithkeystakeholderssuchasinfrastructureoperatorsorlocalauthoritiesshouldbepartoftheirstrategy.Onlysixcompaniesdemonstratethattheyhavepushedinfrastructureoperatorstocommittothedevelopmentoflow-carboninfrastructure.Onlyfourcompaniesintheassessment–ANAHoldings(AllNipponAirlines),DeutscheBahn,TokyuCorporation,RenfeOperadora,RossiyskiyeZheleznyeDorogi(JSCRussianRailways)andGo-AheadGroup–collaboratewithlocalauthoritiestointroducelow-carbontransportatthescalerequiredforatransition.Overall,thesectornotonlyshowsalackofsupportforregulationbutalsofailstoengagewithkeystakeholderstoimplementthechangesrequired,whichkeepscompaniesoperatingwithbusinessasusual.Asanexample,itisonlyrecentlywiththeFitfor55PackagethattheEUproposedincludingshippingaspartofitsemissiontradingscheme(ETS)andgraduallyfrom2023onwards.Similarly,theEUETSdoesnotcoverlong-haulflights,whichaccountforthemajorityofemissionsintheaviationsector.Whilesomecompaniesdosupportmorestringentenvironmentalregulations,Europeantradeassociationsinthetransportsector,particularlyforshippingandaviationaretheonesthatmostactivelylobbyagainstsuchregulations:seeInfluenceMap’s2022report.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport11CustomerengagementTransportcompaniescaninfluencecustomerstoreducetheirGHGemissionsthrougheducation,marketingcampaignsandbyofferingcustomerslow-carbonalternatives.Ofthe90assessedcompanies,47donothaveastrategytoinfluencecustomerstoreduceemissions.Notably,nocompanyhassetemissionsreductiontargetsforitscustomerengagementstrategy.Freightforwardingcompaniesorganisethedeliveryofgoodsviamultiplemodesoftransport.Toreduceemissions,theycanofferintermodalsolutions,suchasacombinationofroadandrailtoreplacehigheremittingairfreight.Whilesevenofthecompaniesthatprovidetheseserviceshaveastrategythatislow-carbonaligned,onlyJ.B.HuntTransportServiceswasfoundtoactuallybeputtingitsstrategyintopracticeatthelevelrequiredforthelow-carbontransition.Waitingforthetrain?Theassessmentsshowthattransportcompaniesarenotusingtheirinfluencetopushforsolutions,eitherinthedevelopmentoflow-carboninfrastructureandtechnologyorinclimatepolicy.Whiletheywaitforthesolutionstobehandedtothem,theycontinuetooperatebusinessasusualwithminoradvancementsinvehicleefficienciesandaninsignificantshiftinbusinessmodels.Theseefficiencieswillnotleadtotherequiredemissionsreductions.Companiesneedtoshowleadershipandusetheirindustryplatformtodrivethelevelofchangeneededforalow-carboneconomy.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport12Keyfinding3:Currentresearchanddevelopmentinvestmentsinemerging,unproventechnologiesandnewbusinessmodelsinthetransportsectorwillnotclosetheemissionsreductiongapintime.Transportcompaniesneedtomakesignificantinvestmentstoshifttolow-carbonbusinessactivities.Mostofthecompaniesinthisbenchmarkfailtodisclosesufficientinformationonresearchanddevelopment(R&D)andcapitalexpenditure.Thedataavailablesuggeststhatonaverageonlyabout0.3%oftotaltransport-relatedrevenuesarereinvestedinlow-carbontechnologyandfuelR&D.Companiesmustactnowtoinvestinthetechnologyandbusinessmodelsthatwillsecurealow-carbonfuture.Companiesneedtoacceleratelow-carboninvestmentsTransportisahigh-emittingsectorwhichfacesmajorchallengesindecarbonisation.Technologicalsolutionsareuniquelyimportanttothesector’stransformation.Moreover,asthesectorisdiverse,aone-size-fits-allapproachdoesnotapply.PastR&Dandcapitalexpenditure(CapEx)andcurrentbusinessmodelsarefailingtoaligncompanieswiththeParisAgreementgoaltolimittemperatureincreaseto1.5°C.Transportismoreexposedtotheoilindustrythananyothersector,withmorethan90%ofitsenergycomingfromcrudeoil-derivedproducts.Smartinvestmentsinlow-carbonvehicles,fuelsandbusinessmodelsarecriticaltodecarbonisingthesector.Infrastructureandvehicleinvestmentshavelong-lastingconsequencesinasectorwhereassetsgenerallyhavelonglifetimes.83%(75)ofthe90assessedcompanieshavefleetsthatareincompatiblewithalow-carbontransition.Thesecompaniesareprojectedtosubstantiallyexceedtheirtotal1.5°Ccarbonbudget.Themajorityofcompaniesfailtodisclosecurrentlevelsofandplansfornew,low-carbonvehiclesintheirfleets.Ofthe90assessedcompanies,justfour–CJLogisticsCorporations,MTR,TokyuCorporationandNSGroep–providesufficientinformationabouttheirfleets.Althoughsomecompaniesareinvestinginnewvehiclesandalternativefuels,mostcompaniesdonotdiscloseinvestmentplansoroutlinehowandwhentheyaimtoincreasetheshareoflow-carbonvehiclesintheirfleets.Technologicaladvancesareparticularlyimportantforthissector.Manyofthesolutions,suchascleanervehicles(fuelcellbuses,electrictrucks)andalternativefuels(ammonia,hydrogen,sustainableaviationfuel(SAF)),arestillunderdeveloped.InvestmentinR&Dandworkinginpartnershipwithsuppliersandtechnologydevelopers(e.g.vehiclemanufacturersorfuelproducers)arecriticaltoreducingtheleadtimefornewtechnologiestohitthemarket.Despitethis,mostcompaniesdonotprovideanydetailonR&Dexpenditure.CompaniesthatdodiscloseR&DinvestmentsfailtoprovideacomprehensiveplanthatalignstheirR&Dwithemissionsreductiontargets.94%(85)ofthecompaniesdonotproviderelevantdataontheirR&Dinlow-carbonvehiclesandenergies.Wheretheydodiscloseinformation,companiesreportinvestinginsolutionssuchasfuelefficiency,transportelectrificationorSAF,butnotattherequiredrate.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport13FIGURE4:TRANSPORT-RELATEDREVENUESONLOW-CARBONTECHNOLOGYNeedforrobustnewbusinessmodelsCompaniesshowalackofefforttoshifttowardsrobustnewlow-carbonbusinessactivities.Onlysixcompanieshavecommittedtophasingoutfossilfuels:DeutscheBahn,DSV,MSCMediterraneanShippingCompany,JDLogistics,NSGroepandZTOExpress.Inaddition,effortsatshiftingdemandtolow-carbontransportmodescouldnotbeclearlyevidencedamongthe90companies.Onlyeightcompanieshavebusinessmodelsthataimtochangedemandpatterns.Moreover,onlyfourofthesecompanies–Go-AheadGroup,J.B.HuntTransportServices,NSGroepandUnitedParcelService(UPS)–haverelativelymaturebusinessmodels(e.g.routeelectrification,intermodaltransport)whichareprofitableandofsubstantialsize.Themostcommoncategoryofnewbusinessactivitiesispromotingtechnicalandoperationallow-carboninnovation.Routeoptimisationandfuelblendingarethemostcommonnewbusinessmodels.However,onlyfourcompanies’businessmodels–Bolloré,CathayPacific,DeutschePostDHLGroupandUnitedParcelService(UPS)–meetallthecriteriacoveredintheassessmentduetoamajorgapincorporatereporting.High-qualitydisclosureiscrucialforstakeholderstobeabletoholdcompaniesaccountableontheirinvestmentsandtheircontributionstoreachingtheParisAgreementgoals.ThedisclosureframeworksdevelopedbyEFRAG,ISSBandSECwillgreatlystrengthencompanies’disclosure,whichwillenforceincreasedaccountabilityandaction.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport14Keyfinding4:Thevastmajorityoftransportcompaniesmustacceleratenecessaryactionimmediatelytomakethelow-carbontransitionjustandequitable,topreventplacingaworkforceofmillionsatrisk.A‘justtransition’envisionsresilientandthrivingworkersandcommunities,existingwithintheglobal1.5oCboundarysetoutintheParisAgreement.WBA’sClimateandEnergyBenchmarkontheTransportSectoristhefirsttoholisticallyrankcompaniesontheircontributionstoajustandequitablelow-carbontransition.Itshowsastrikingandsystemiclackofactionbycompaniestoprepareforandmitigatethesocialimpactsofdecarbonising.Alarmingly,allcompaniesscore0onjusttransitionplanning,placingaworkforceofaround10millionpeopleatrisk.Thebenchmarkfindingsshowaworryinglackofactionbycompaniesacrossallpartsofthejusttransitionassessment.Moreover,whencomparingtheACTresultswiththesocialassessmentresults,almostnocorrelationwasfoundbetweenacompany’srelativeperformanceondecarbonisationanditseffortstomitigatesocialimpacts.Thissuggeststhatmanycompaniescontinuetoseetheirsocialandenvironmentalimpactsasindependent,ratherthaninterrelated,andarefailingtolinktheirlow-carbonplanningandactivitiestoimpactsonworkersandcommunities.PeoplearebeingleftoutofdecisionsthataffecttheirfutureTransportcompanies’scoresareworsethanthosefortheoil&gas,electricutilitiesandautomotivesectorsin2021onalljusttransitionindicators.Thisincludesthefirststepstowardsajusttransition:socialdialogueandstakeholderengagement.Socialdialoguewithworkers,unions(orequivalentgroups)and,wherenecessary,governments,iskeytoajusttransition.Socialdialogueshouldguaranteetheeffectiveparticipationofworkersinameaningfulnegotiation,sothattheyhavetheopportunitytoinfluencedecisionsandoutcomesonbringingaboutajusttransitionandavoidingadversesocialimpacts.Stakeholderengagementisessentialtoincludethevoicesandexpectationsofthoseimpactedbythetransitionandshouldinvolveawiderangeofstakeholdersincludinggovernmentandbusinessrepresentatives,communities,andothercivilsocietygroups.While13%(12)ofthe90companiescommittosocialdialogue,onlyonecompany–A.P.Møller-Maersk–discloseswhichstakeholdersitengageswithonjusttransition.Critically,nocompanydisclosesthestepsittakestowardsengagingstakeholdersordemonstratessocialdialogueandengagementonajusttransition.Planningforatransitionthatisjustandequitableisfundamentaltoensuringcompaniescausenoharmtoworkersandcommunitiesimpactedbytheiractivities.Decarbonisationisnotpossiblewithoutadequateandthought-throughplanning.Further,thisplanningshouldencompasstime-boundandmeasurableindicators,developedinpartnershipwithstakeholders,tomanagetheimpactofthetransitiononworkers,communitiesandvulnerablegroups.Alarmingly,alltransportcompaniesscore0onallfouraspectsofjusttransitionplanning,signallingalackoffundamentalandconcretestepstopreparefor,preventandmitigateharmandmaximisepositiveoutcomesforpeople.Thispictureof‘somecommitment,generallackofdisclosureandlittletonoevidenceofaction’echoesthetrendfoundintheACT(low-carbon)assessments(seekeyfindings1,2and3).2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport15FIGURE5:TRANSPORTCOMPANIESONJUSTTRANSITIONPLANNINGThebenchmarkalsoassessescompanies’commitmentsandmeasuresrelatedtoreskillingandupskilling,employeeretention,andgreenanddecentjobcreationandaccess.Asin2021,companieswerefoundtoscorehigheracrosstheseindicatorsthanothersandappeartohavesomeexistingcapacityandabilitytoactonjobcreationandtraining,includingforwomenandvulnerablegroups.Thebestperformancewasonmeasuresforskills,trainingandeducation,which38%(34)ofthecompaniesmet.3Additionally,13%(12)ofthecompaniesdisclosedactionstoembedequalityofopportunityforwomenandvulnerablegroupsinjobcreation,and7%(6)ofthecompaniesdisclosedactionstoembedequalityofopportunityinreskilling,trainingandeducation.However,similartolastyear’sfindings,noneofthecompaniesassessesanddisclosestherisksandimpactsofemploymentdislocationlinkedtoitslow-carbontransition.Thisiscriticaltoensuretherightskillsandjobsarebeingprovidedinthetransition.Onlyonecompany,FirstGroup,publiclycommitstobothgreenanddecentjobsandreskillingandupskillingofworkersdisplacedbythelow-carbontransition.Companiesarenotusingtheirinfluencetoprotectpeople,managesocialimpactsandadvocateforajusttransitionGiventhatnoneoftheassessedtransportcompaniesmeetanyjusttransitionplanningelements,itisperhapsunsurprisingthatallcompaniesscore0onsocialprotectionandsocialimpactmanagement.Thisisnecessarytocomplementnationalsystemsbypreventingstrandedworkersandcommunitiesandlesseninginequalitiesbetweenformalandinformalworkersandvulnerablegroups.Thesameistrueforadvocacyofjusttransitionpolicyandregulation,wherenocompanywasabletodemonstratethatitslobbyingactivitiessupportanddonotundermineajusttransition.Thesefindingsaddtoa3Itisimportanttonotethatforthe2022assessments,companies’ACTresultsdidnotdirectlyfeedintothejusttransitionindicatorassessments,butitisourambitiontoexplorehavingamorecombinedassessmentwithACT.Therefore,therigouroftheassessmentforindicatorelements3c,3d,4c,and4dmayincreaseinfutureassessments.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport16deeplyconcerningpictureofahigh-emittingsectoralmostwhollylackingthecapacitytotakeadequateactiontomanagethesocialimpactsofdecarbonisation.Allactorsintheecosystemneedtostepupforasuccessfultransition.Governmentsneedtoestablishanenablingpolicyenvironmentandincentivisegreenandsociallypositivepractices,suchasgreenfiscalpolicyandpublicprocurement.Companies’roleiscrucialtoo:theymustco-createrobusttransitionplanswiththosewhowillbeaffectedbythem.Theymustprovidegreenjobsandsupportskillsdevelopment,contributetosocialsecuritysystems,supportgovernmentsthroughlobbyingandadvocacyefforts,andrespecthumanrights.Itisnotablethatthecompanyscoringhighestonthesocialassessment–Maersk–operatesintheshippingsector;readmoreaboutthatsectorandrelatedinitiativesbelow.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport17Keyfinding5:Onlyaminorityoftransportcompaniesdemonstrateeffectivehumanrightsduediligence–withoutadequatepriorityforhumanrightsanddecentworkpractices,ajusttransitionwillnotbepossible.Decarbonisingthetransportsectorcanbegloballytransformative,butitalsobringsaresponsibilitytoensuredecarbonisationiscarriedoutinasociallyjustway.Respectforhumanrightsandprovidingandpromotingdecentworkunderpinsajusttransition.Beyondthe10millionorsopeopleestimatedtobedirectlyemployedbythe90assessedtransportcompanies,millionsmorearelikelytobeaffectedthroughtheoperationsandsupplychainsofthesecompanies.Thebenchmarkhighlightsagapbetweencorporatecommitmentstorespecthumanrightsandprovidedecentworkandtheprocessescompanieshaveinplacetoensuretheseinpractice.43%(39)ofthecompanieshaveahumanrightspolicycommitment,yetonly3%(3)ofthecompaniesdemonstrateaneffectivehumanrightsduediligenceprocess.Thecoresocialindicator(CSI)assessmentfindingsechotheACT(low-carbon)andjusttransitionfindings:somecompaniesshowcommitmentstowardshumanrightsandworkers’rights,butgenerally,companiesprovidelimiteddisclosureonthesetopicsanddemonstratelittleaction.Companiesareassessedontheirfundamentalactionsforhumanrights,decentworkandethicalbusiness,allofwhichunderpinajustandequitablelow-carbontransition.AjusttransitionisunderpinnedbyrespectforhumanrightsandprovidingandpromotingdecentworkTheUNGuidingPrinciplesonBusinessandHumanRights(UNGPs),whichhavebeeninplaceforovertenyears,establishhowcompaniesshouldaddresstheirhumanrightsimpacts,includingthosecausedthroughdecarbonisationefforts.Companiessignaltheirintentbycommittingtorespecthumanrightsintheiroperationsandexpectingthesamefromtheirbusinesspartners.Theyshouldfurtherundertakehumanrightsduediligencetounderstandandavoidoraddressthepotentialnegativeimpactsoftheiractivitiesonpeopleandcommunitiesandprovideaccesstoremedy.Acrossthe90companiesassessedinthisbenchmark,43%(39)ofthecompanieshavehumanrightspolicycommitments.However,only3%(3)ofthecompaniesdemonstratehavingaduediligenceprocessthatincludesidentifying,assessingandtakingactiontoprevent,mitigateandremediatesalienthumanrightsrisks.Thelackofasoundduediligenceprocessunderminesprogressachievedonhumanrights,effectivelycausingharmtoworkersandcommunities.Inactiononhumanrightsduediligencebycompaniestranslatesintoastepbackwardswhenitcomestoupholdingworkers’andcommunities’wellbeing.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport18FIGURE6:TRANSPORTCOMPANIESWITHHUMANRIGHTSPOLICIESSimilarly,companiesareexpectedtomakepubliccommitmentsanddisclosetheiractionsinrelationtodecentworkpractices,butdisclosureonactionsisseverelylacking.43%(39)ofthecompanieshaveapubliclyavailablepolicystatementcommittingtorespectthehealthandsafetyofworkers.Further,44%(40)ofthecompanieshaveapublicexpectationofthoseintheirsupplychain4torespectworkerhealthandsafety.Regardless,onlythreecompanies(3%)–CathayPacific,EvergreenMarineCorporationandSingaporeAirlines–disclosequantitativeinformationonhealthandsafetyfortheirworkers.Commitmentsareanimportantfirststepandsignalintent,butcompaniescanandshoulddomoretotakeanddiscloseactionstowardsdecentwork.Humanrightsduediligenceanddecentworkpracticesareintegraltoajusttransition.Byintegratingexistinginternationalstandards,suchastheUNGPsandInternationalLabourOrganization(ILO)Conventionsintheirpolicycommitmentsandbusinessoperations,companiescanaddressadversehumanrightsanddecentworkimplicationsthatunderminejusttransitionprocesses.Doingthisaspartofajusttransitionplanmayalsoallowcompanieswithaweakertrackrecordonhumanrightstoremediatetheharmdoneandintegrateworkers’andcommunities’rightsprotectionintheiroperations.Itisalsoameansforcompaniestoincreaseinvestorconfidenceandaccesstocapital,maintaingoodrelationshipswithcivilsociety,andachievehigheremployeeretention.Overall,thebenchmarkshowsthatcompaniesneedtosignificantlydisplayleadershipandenhancedisclosureonajustandequitablelow-carbontransition.WBAhaswelcomedtheproposedmandatorydisclosureframeworksdevelopedbyEFRAG,ISSBandSECasthesecangreatlystrengthencompanies’disclosure,therebyenablingincreasedaccountabilityandaction.4Thetermusedintheindicatoris‘businessrelationships’.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport19Sub-sectorfindingsAviationAviationisahigh-profilesector.Ofthe25aviationcompaniesassessed,16havenet-zerotargetsandsomehavesocialandjusttransitioncommitments.However,manyaviationcompanieslackinterimtargets,plansanddetailstobackupandfulfilthesecommitments.Low-carbontransitionAviationisahigh-profilesectorandpublicscrutinyhascompelledairlinestosetambitiousemissionsreductiontargets.Theassessmentofthe25mostinfluentialairlinesrevealedthat16ofthemhaveseta2050net-zerotarget,alignedwiththesectoraltargetsetbytheInternationalAirTransportAssociation(IATA)andtheAirTransportActionGroup(ATAG).Infact,AlaskaAirGroupaimstoachievenetzeroby2040.However,theselong-termambitionslacksupportingshort-andmedium-termtargets.OnlyInternationalAirlinesGroup(IAG)hasameaningful2025emissionsreductiontarget.Further,onlytencompanieshave2030or2035targets.Tenoftheassessedairlineshavecommittedtosetascience-basedemissionsreductiontarget.However,sofar,theScienceBasedTargetsinitiative(SBTi)hasonlyvalidateda2035emissionsreductiontargetsetbyAmericanAirlinesGroupanda2030targetsetbyLufthansaGroup.Further,onlyIAG,JapanAirlinesandUnitedAirlinesHoldingshavespecificallyexcludedtheuseofoffsetstoachievetheirnet-zerotargets.Moreover,outoftheremainingcompaniesrelyingonoffsets,onlyfourcompaniesspecifythepercentageofreductionstheyintendtoachievethroughtheiruseofoffsets.Theremainingcompaniesdonotdisclosethesedetails,whichleadstothequestionwhetherthisisjustanothersmokeandmirrorstactictodivertpublicattention.Currently,theonlydiscernibleemissionsreductionsbeingachievedarethroughfleetmodernisation,butairlinesshouldbeheldaccountableformakinggreaterchangesasthisisnotalong-termsolution.Onlythreeairlinesdisclosedtheirlow-carbonR&Dspend,whichwasmostlyfocusedonscalingupsustainableaviationfuel(SAF).Nearlyallairlines’plansrelyonSAFfordecarbonisation.AlthoughASTMD7566,thestandardregulatingthetechnicalcertificationofSAF,allowsonly50%ofjetfueltobereplacedbySAF,itisoneofthefewrealisticoptionstoreduceemissionsinthemediumterm.AirlinesmustsupportSAFproductionandinfrastructuredevelopmentbygivinglong-termcertaintytotheSAFsectorthroughcommitments,contractsandofftakeagreements.Urgentactionandconsiderableinvestmentsarerequiredtodevelopallofthelow-carbonsolutionsneededtodecarbonisethesector.Almosthalfoftheaviationcompaniesinthebenchmarkmentionhydrogen-fuelledplanesorbatteryelectricaircraftaslow-carbonsolutionsforshort-haulflights.Bothtechnologiesarecurrentlyonlyattheearlyprototypestage.Noevidencewasfoundthatairlinesaredevelopingbusinessmodelsrelatedtoshiftingdemandfromhigh-emissionmodesoftransport,suchasflying,tolow-emissionalternatives.OnlyAirFranceGroup(excludingKLM),offerstrainandairtravelonthesamereservationinpartnershipwiththerailcompanySNCFGroup.Itcurrentlyoffersthisserviceat18stationsinFrance.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport20Theassessmentshowsthatairlinestendtorelyonthirdpartiestocreatethesolutionsrequiredforasuccessfullow-carbontransition.Airlinesurgepolicymakerstoadoptcertainpolicies,governmentstocreateincentivesandincreasefunding,andaircraftmanufacturersandfuelsupplierstoprovidelow-carbonsolutions.Insteadofwaitingforallthistocometofruition,airlinesshouldbemoreproactiveanddrivechangethemselves.On7October2022,theInternationalCivilAviationOrganization(ICAO)establishedagoaltoachievenet-zeroemissionsintheaviationsectorby2050,whichcanfurthersupportmemberstatesinregulatingemissions.However,thisgoalwasunderminedatthe2022UNICAOassembly,withmemberstatesagreeingonalowerbaselineforoffsettingemissions.Assuch,itisurgentformemberstatestocomplementthisschemewithbindingtargetsthatwillbetterregulateemissionsintheaviationsector.SocialandjusttransitionOnthesocialassessment,companiesintheaviationsub-sectorhaveamedianscoreof5.0/40,higherthanthebenchmarkmedianof4.4/40.Thereisahigherlevelofcommitmentandactioncomparedtoothersub-sectors,withthreeofthetopfivescoringcompaniesonthesocialassessment–ANAHoldings(AllNipponAirlines),ChinaAirlinesandJapanAirlines–beinginthissub-sector.However,tenofthecompaniesinthissub-sectorscore0onthejusttransitionindicators,indicatinganopportunityforgreaterdisclosureandactioninthisarea.ShippingShippingisasub-sectorwithsomeevidenceofdecarbonisationandajusttransition;butitslow-carbonplansareheavilyreliantonalternativefuelssuchasammoniaandmethanolthatwillneedaninvestmentofbetweenUSD1.4-1.9trillionbetween2030and2050.Someshippingcompaniesshowawarenessofjusttransition,butoverall,thesub-sectorhasalongwaytogo.Low-carbontransitionInternationalshippingaccountsforthree-quartersoftotalfreighttransportactivityand3%ofglobalemissions.Tenofthe18shippingcompaniesassessedinthebenchmarkhave,tovaryingdegrees,decreasedtheiremissionsintensityoverthelastfiveyears,primarilythroughimprovementsinenergyefficiency.However,long-termdecarbonisationreliesontheuseofalternativefuels.Althoughshippingisthemostenergy-efficientwaytotransportcargo,itiscurrentlyheavilyreliantonfossilfuels,whichaccountfor99.9%offinalenergyconsumptioninthesub-sector.Thesub-sector’spathwaytonetzeroby2050reliesalmostexclusivelyonthedevelopmentoflow-carbonalternativefuels.Toalignwiththesub-sector’s1.5°Cpathway,thesefuelsareexpectedtoaccountfor84%offuelusageby2050.Currently,noneoftheassessedshippingcompaniesoperateanyvesselsusingalternativefuels.Maerskisaimingtobethefirsttooperateazero-emissionvesselwithitsplantobringagreenmethanol-operatedshipintooperationin2023.Ammoniaandmethanolarethemostpopularoptionsforfuturealternativefuelsamongtheassessedcompanies.However,significantinvestmentwillbeneededtomakethesefuelsviableforuseatscale.Itisestimatedthatinordertofullydecarboniseshippingby2050,aninvestmentofUSD1.4-1.9trillionwillberequiredbetween2030and2050.Someofthecompanieshavestartedinvestingandcollaboratingwithotheractorstodevelopthesefuels.Forexample,MaersklaunchedtheMaerskMcKinneyMøllerCenterforZeroCarbonShipping,anindependentresearchanddevelopmentcentre,andMISCGroupco-foundedtheCastorInitiative2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport21todevelopammonia-fuelledtankers.However,asignificantproportionoftheshippingcompaniesshownoevidenceofhavingtakenanyactiontocontributetothedevelopmentofalternativefuels,insteadchoosingtorelyonoutsideactorstobringthemtomaturity.Thislackofactioncallsintoquestionthecredibilityofmanyoftheshippingcompanies’decarbonisationtargets.Asshippingoperatesglobally,theroleofinternationalregulatorsiscrucialtoensurethatcompaniesareheldtoaccount.TheInternationalMaritimeOrganization(IMO)isakeyregulatorybodyforshipping.TheIMOiscurrentlytargetinga50%reductioninshippingemissionsby2050comparedto2008,whichitselffallsshortoftheambitionrequiredbytheParisAgreement.Overhalfoftheassessedshippingcompanieshavesetmoreambitioustargets,withtenofthe18companieshavingsetnet-zerotargetsfor2050orearlier(2040inthecaseofMaerskand2045inthecaseofHapagLloyd).However,fourofthecompanieshavenotsetnet-zerotargetsandhaveinsteadsettheirtargetsinlinewiththeIMO.SocialandjusttransitionOnthesocialassessment,companiesintheshippingsub-sectorhaveamedianscoreof4.5/40,comparabletothebenchmarkmedianof4.4/40.Thereisasimilarlackofcommitmentandactionasinothersub-sectors,withtheexceptionofafewnotabledifferences.Maerskreceivesthehighestscoreof12.4/40onthesocialassessment,whichincludesajusttransition.Itisthissub-sectorthatshowsthemosteffortsacrossseveralinitiatives,bringingshippingcompaniestogetherindialogueandestablishingbestpracticesinrelationtoajusttransitionandhumanrights.5RoadPassengerroadcompaniesarecriticalforday-to-daymobilityinsociety.Overtwo-thirdsoftheassessedroadtransportcompaniesliveuptothatpublicrole,engagingcustomersandpolicymakersonthelow-carbontransition.Roadfreightcompaniesplayanequallysignificantroleinoureconomyandcanshowmorededicatedleadershiptowardsalow-carbontransitionanditssocialaspects.Low-carbontransitionOutofthe90companiesassessedinthebenchmark,39haveroadtransportoperations.Ofthese,justsixcompaniesprovideroad-onlytransportationservices.Itisclearthatroadtransportisintegraltomultimodaltransportsolutions,whetherprovidingport-to-depot,last-miledeliveryorbusservicesalongsiderail.Theassessedcompanieswithroadtransportoperationsfallintotwodistinctcategories.Thefirstgroupcomprisespublictransportoperators(tencompanies).Typicallyofferingroadandrailservices,theprimaryformofroadtransportusedbythesecompaniesisbuses.Theycompriseamixofstate-ownedandpubliclylistedorganisations.However,allarepublic-facingorganisations.Thisisreflectedintwoways:60%ofcompaniesdescribehowtheyareengagingwiththeircustomers5TheInstituteforHumanRightsandBusiness(IHRB),theRaftoFoundationforHumanRights,theInternationalLabourOrganization(ILO),theOfficeoftheUnitedNationsHighCommissionerforHumanRights(OHCHR),theDanishInstituteforHumanRights(DIHR),theUNGlobalCompact,theInternationalTransportWorkers’Federation(ITF),theInternationalChamberofShipping(ICS),theInternationalMaritimeOrganization(IMO)andtheSustainableShippingInitiative,jointlyandseparately,provideresourcesfortheshippingsector.Informationcanbefoundhere:https://www.ihrb.org/focus-areas/oceans/shippingandviaeachorganisation’swebsite.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport22througheducationandinformationsharingand70%areworkingeitherdirectlyorthroughtradeassociationstoinfluencegovernmentclimatepolicy.PublictransportcompanieshavebeenhardhitbyCOVID-19,withreportsofadeclineinpassengertripsbyover90%inmanyoftheworld’smajorcities.Despitethis,companiesareinvestinginR&Dandnewbusinessactivities.Theserelatetolow-carbonvehicles,suchaselectricbuses,andgeneratingorinvestinginalternativesourcesofenergytopowertheirfleets,suchasbiofuelsorrenewableenergy.Thesecondgroupcompriseslogisticscompanies,whichencompassroadhaulageandpostalservices(29companies).Theirmainformsofroadtransportrangefromlocaldeliveryvanstolargetrucks.66%ofthesecompaniessubcontractsomeproportionoftheiroperations(almosttwo-thirdsonaverage).Mostlogisticscompanieswithroadtransportoperationsarepredictedtoperformworseiftheassessmentweretoberepeatedinthenearfuture.While72%ofcompanieshaveatransitionplanofsomesort,only41%havescope3emissionsreductiontargetsand34%haven’tsetanytargetatall.Notably,nearly40%oftheseroadlogisticscompaniesareprojectedtofaceseriousrisksthatcouldunderminetheirprofitabilityandabilitytosuccessfullyimplementalow-carbontransitionplan.Theriskshighlightedbytheanalysisincludealackofknowledgeaboutsubcontractedemissions,alackofinvestmentinlow-carbonvehiclesandlackofR&Donlow-carbonsolutions.Toaddtothis,41%ofthesecompaniesaremembersoftradeassociationsthatholdpositionsonlegislationthatcouldhinderprogresstowardsalow-carboneconomy.Thissuggeststhatnotonlyaremanyroadlogisticscompaniesfailingtotransitiontoalow-carbonfuture,theyarealsosupportingorganisationsactivelyworkingagainstit.However,therearecompaniesthatstandoutfromthistrend.LaPosteGroupe(ranking2ndoveralland2ndontheACTassessment)hasreduceditsemissionsinlinewithits1.5°Cpathwayfrom2015to2020andisontracktoachieveitstargetstoreducescope1,2and3emissionsby30%by2025comparedto2013.TheSBTihasvalidatedthistargettobeconsistentwitha1.5°Cpathway.RoyalMailplc(ranking9thoverall)hassetatargettoachievenet-zeroemissionsby2045,anditsdetailedlow-carbontransitionplanisinformedbyclimatescenarioanalysisincludinga1.5°Cscenario.IthasalsolinkedCEOincentivestoprogressonclimatechange.DeutschePostDHLGroup(ranking16thoverall)showssimilarstrengths.Thesecompaniessetclearexamplesofhowroadfreightcompaniescanplanfordecarbonisation.SocialandjusttransitionOnthesocialassessment,companiesintheroadtransportsub-sectorhaveamedianscoreof4.4/40,inlinewiththebenchmarkmedianof4.4/40.Thereisasimilarlackofcommitmentandactionasinothersub-sectors.However,certainmultimodalcompanieswithroadtransportoperationsstandoutintheirefforts,suchasFirstGroup(seethemultimodalfindingbelow).Nevertheless,fiveofthecompaniesinthissub-sectorscore0onthejusttransitionassessment,anditisclearthatthemajorityofroadtransportcompaniesassessedinthebenchmarkcanincreasedisclosureandactioninthisarea.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport23RailRailcompanieshaveakeyroletoplayindecarbonisingthetransportsector–providinglow-carbontransportforpassengersandfreight–andarecriticaltothefunctioningofsociety.However,theyhavealongwaytogointermsofdisclosure,especiallycompaniesoperatinginthepublicsector.Nevertheless,publicsectorrailcompaniesareamongthestrongerperformersonajusttransition,becausetheycommittoengaginginsocialdialogueandactivelyworktoincludeopportunitiesforwomenandvulnerablegroupsintheireffortstoeducateandcreatejobs.Low-carbontransitionIn2016railaccountedfor8%ofglobalpassengertravelandabout7%offreightactivity,butonly2%ofenergyuseinthetransportsector.Railtransportcompaniesarekeytodecarbonisingthesectorbypromotingashiftfromhigh-emittingtransportmodestowardsrailpassengerandfreight.However,publicsectorrailcompaniesareamongtheworstinthebenchmarkwhenitcomestodisclosure,withmanyfailingtoreportrobusttransitionplansandactivitydata.Logisticsrailcompaniesare,however,pursuingnewbusinessactivitiesthatseektoshiftroadandshippingtransportservicestorailthroughintermodaltransportsolutions,buttheseeffortsareinearlystagesandlackrobustness.Ofthe90companiesassessedinthebenchmark,34haverailtransportoperations.Ofthese,18companiesarepassengerrailtransportcompanies,and16aremultimodallogisticscompanies.Thesetwodistinctcategories,logisticsandpassengerrailtransport,havedifferentleversandprioritiesinrelationtoalow-carbontransition.Over55%ofthe18passengerrailcompaniesaremajorityorfullystate-owned,claimingtoalignwiththeirnationalgovernments’climatetargets.67%ofpassengertransportcompanieshavesetnet-zerotargetsfor2050.DeutscheBahn(ranking10thoverall)andSNCFGroup(ranking13thoverall)havenearterm2030science-basedtargetsalignedwitha2CscenarioandNSGroep(ranking4thoverall),NationalExpressGroup(ranking6thoverall),FerroviedelloStatoItaliano(FSItaliane)(ranking7thoverall),andDeutscheBahnareleadingwithcarbon-neutraltargetsfor2040.Toachievetheirtargets,passengerrailcompaniesareexpandingtheirelectrifiedroutemileagetopromoteamodalshiftintheircountries.Railnetworksarehighlyelectrified,withjustoverhalfofthecompanieshavingabout70%oftheirnationalroutemileageelectrifiedandanotherquarterreportingaround100%electricvehiclesintheirfleet.Infact,theAmericanNationalRailroadPassengerCorporation(Amtrak)standsoutinhowsignificantlyitfallsbehind,withjust22%electrictrainsinitsfleetandnoclearplantoexpandthisshareinfuture.Forthoseraillinesthatcannotbeelectrified,passengerrailcompaniesareinvestinginenergyefficiency,andR&Dinhydrogenfuelcells,batteriesandbiofuels.However,theseeffortsareunderminedbycompanies’lackofdisclosureandtransparencyonR&Dinvestment,activityandrobusttransitionplans.55%ofcompaniesdonotprovideenoughinformationtoassesstheiralignmentwiththeir1.5°Cpathway.Companiesarefallingshortindrivingtheshiftfromfossilfueltorenewableenergygenerationorprocurement,withonlyathirdofthecompaniesconsideringthischangetotheirbusinessmodel.Moreover,only23%ofcompanieshaveclientengagementstrategiestomakeamodalshiftattractivebyimprovingcustomerconvenienceinlocalandlong-distancetransport.Logisticscompanieswithrailfreightservicesaccountfor45%oftherailcompaniesinthebenchmark.88%ofthesecompaniessubcontractsomeproportionoftheiroperations,withanaverageof60%oftheiractivitybeingsubcontracted.Mostlogisticsrailoperatorsarepredictedtoperformworseifthe2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport24assessmentweretoberepeatedinthenearfuture.Forthemajorityofthesecompanies,railrepresentsthesmallestshareofactivities,beingnegligibleinsomecases.Thissuggeststhatfreightcompaniesarefailingtopromoteamodalshiftawayfromtheirhigh-emittingoperations.However,somecompaniessuchasJ.B.HuntTransportServices,JDLogistics,NipponExpressandSGHoldingsdoreportearly-stageandweakbusinessmodelstoshiftroadandshippingtransportationservicestointermodaltransport,primarilyusingmorefuel-efficientrailservicesforfreight.SocialandjusttransitionOnthesocialassessment,companiesintherailtransportsub-sectorhaveamedianscoreof2.3/40,lowerthanthebenchmarkmedianof4.4/40.Thereisalowerlevelofcommitmentandactionamongrail-onlycompaniescomparedtoothersub-sectors.However,publicsectorandpublic-facingrailcompaniesareamongthestrongerperformersonthejusttransitionassessment,becausetheycommittoengaginginsocialdialogueandactivelyworktoincludeopportunitiesforwomenandvulnerablegroupsintheireffortstoeducateandcreatejobs.FSItalianeranks5thonthesocialassessment,whileDeutscheBahntiesin6th(withFirstGroup).MultimodalMultimodaltransportcompanieshaveauniqueroletoplayintheshifttowardslow-carbonmodesoftransport.Thevastmajorityofthesecompaniesusesubcontractors.So,increasedtransparencyandtargetsforlow-carbonvehicleusearekeytodrivethelow-carbontransitionamongthesecompanies.Notably,onemultimodalcompany,FirstGroup,hasthestrongestjusttransitioncommitmentsoutofallthe90transportcompaniesassessed.Low-carbontransitionMultimodaltransportcompaniesoperateservicesacrossmorethanonemodeoftransport:air,rail,roadandshipping.Outofthe90companiesassessedinthebenchmark,27aremultimodal.Ofthese,24arelogisticscompanies,i.e.companiesfacilitatingthemovementofgoods.Moreover,74%ofthesecompaniesoperatemorethanthreemodesoftransport,andallthemultimodalcompanieshaveroadtransportoperations.81%ofmultimodaltransportcompaniessubcontractapartoftheirbusinessactivity.Themedianvalueforthesecompaniesindicatesthattheysubcontract75%oftheiroperations.Companiesthatsubcontractasignificantproportionoftheirbusinessareasset-light,andthereforetransformingtheirownfleetaloneisunlikelytobesufficienttoreducetheiremissionsintensityinlinewitha1.5°Cpathway.55%ofthecompaniesreportinvestmentindigitalsolutionssuchasrouteoptimisationandreducingemptymiles.However,onlyUPSandRoyalMailplcreportthatthesesolutionsreduceemissions.Around70%reporttheirsubcontractoremissionsaspartoftheirscope3emissions.However,only50%showengagementwithsubcontractors,forexample,throughasuppliercodeofconduct.OnlyDeutschePostDHLGrouphasaclearstrategytoreducesubcontractoremissions,includingtargetsforalternativefuelsandvehicles.Ofthethreeremainingcompaniesthatdonotsubcontractanyoftheiractivity,nonereporttheirshareoflow-carbonvehicles.NationalExpressGroupistheonlyoneofthesecompanieswithcleartargetsforlow-carbonvehicles.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport25Itfollowsthen,thatnomultimodalcompanyhasdemonstratedrecentemissionsintensityreductionsinlinewiththeir1.5°Cpathway.Infact,nearlyhalfofthesecompaniesreportinsufficientdatatoevenallowfortheanalysis.Multimodalcompanieshaveauniqueroletoplayintheshifttowardslow-carbonmodesoftransport.Beyondtransitioningtolow-carbonvehiclesandfuels,thesecompaniescanshifttransportmodesusedwithintheirbusinessactivities.Sixofthecompaniesmentionstrategiesforamodalshift.Forexample,USPostalServiceplanstoswitchitssubcontractedairoperationstoagroundfleet.J.B.HuntTransportServiceshasformedanagreementwitharailwaycompanytoswitchfromroad-onlytointermodalroadandrailoperations,whichtheyexpecttobe2.5timesmorefuelefficient.DeutschePostDHLGroupisprovidingopportunitiesforcustomerstoselectshippingoverairtoreducebothparties’emissions.SocialandjusttransitionOnthesocialassessment,multimodaltransportcompanieshaveamedianscoreof4.6/40,comparabletothebenchmarkmedianof4.4/40.Thereisasimilarlevelofcommitmentandactionasinothersub-sectors.Notably,FirstGroup(ranking3rdoverallandtyingin6thonthesocialassessment)haspubliccommitmentsongreenanddecentjobcreationandreskillingandupskillingofworkersandaffectedstakeholdersinthelow-carbontransition.Itistheonlycompanytopubliclydisclosecommitmentsinbothoftheseareas.2022ClimateandEnergyBenchmarkontheTransportSectorInsightsReport26AbouttheWorldBenchmarkingAllianceFoundedin2018,theWorldBenchmarkingAlliance(WBA)isanon-profitorganisationholding2,000oftheworld’smostinfluentialcompaniesaccountablefortheirpartinachievingtheSustainableDevelopmentGoals.Itdoesthisbypublishingfreeandpubliclyavailablebenchmarksontheirperformance.WBAshowswhatgoodcorporatepracticelookslikesothatleadingcompanieshaveanincentivetokeepgoingandlaggardsfeelpressuretocatchup.WBAhasidentifiedsevensystemsthat,iftransformed,havethegreatestpotentialtoputoursociety,planetandeconomyonamoresustainableandresilientpath.Thesearethetransformationofoursocialsystem,ouragricultureandfoodsystem,ourdecarbonisationandenergysystem,ournaturesystem,ourdigitalsystem,oururbansystemandourfinancialsystem.Bybenchmarkingcompaniesoneachsystemtransformationeverysecondyear,WBArevealswhereeachcompanystandsincomparisontoitspeers,whereitcanimproveandwhereurgentactionisneeded.Thebenchmarksprovidecompanieswithaclearroadmapofthecommitmentsandchangestheymustmake.Overtime,theywillshowwhetherornotthese2,000companiesareimprovingtheirbusinessimpactonpeople,workers,communitiesandtheenvironment.Theyequipeveryone–includingacommunityof300+organisationsknownas‘Allies’–withtheinsightsthattheyneedtocollectivelyensurethattheprivatesectorchanges.Formoreinformation,visitwww.worldbenchmarkingalliance.organdfollowusonTwitter@SDGBenchmarks.Ifyouhaveanyfeedbackonourfindings,pleasereachouttoVickySins,DecarbonisationandEnergyTransformationLeadatWBA:v.sins@worldbenchmarkingalliance.org.
VIP
