Each year, investors express more interest in company action to combat climate change. In response, companies make highly publicized statements that they are aligned with the Paris Accord or have a net-zero commitment to persuade investors, the SEC, and customers that their corporate practices are in line with keeping global temperature rise below 1.5 degrees Celsius (1.5°C).

Corporate statements often are well-crafted greenwashing, not heralds of investments in decarbonization.

For example, this year a resolution filed by Proxy Impact on behalf of Kiki Tidwell at IDACORP – Idaho’s largest electric utility – asked the company to disclose emissions targets in line with the Paris Agreement for its full scope of operational and product emissions. IDACORP touts its 100 percent clean energy by 2045 goal as being “more aggressive than the Paris Agreement goal of reducing CO2 emissions to net zero by 2050,” and many investors have accepted the hydro-intensive company as a green utility.

But, in pursuing the resolution, we dug into a critical question for investors: “What are the emissions targets and performance that indicate a company is, in fact, ­Paris-Aligned”?

Investors can turn to guidance from the Science-Based Targets Initiative (SBTi) to answer this question. In 2019, the United Nations Environment Program calculated that, “to get in line with the Paris Agreement, emissions must drop 7.6 per cent per year from 2020 to 2030 for the 1.5°C goal.” SBTi has developed targets for the utility sector to align corporate emissions with this goal.

IDACORP’s 2021 Integrated Resource Plan shows that it rejected a 100 percent clean energy by 2045 portfolio in favor of a “preferred portfolio” that releases, at minimum, seven million additional metric tons of CO2 into the atmosphere.

IDACORP is proud to have reduced carbon intensity by 29 percent from 2010 to 2020, using a 2005 baseline. Yet, one needs to dig into the disclosures to see that its carbon intensity has been increasing over the last three years. SBTi recommends a baseline of 2015 or sooner and calculates that to be aligned with the Paris Accord, companies in the power sector must reduce their carbon intensity by 85 percent between 2020 and 2030.

In addition, the Company’s Emissions Reduction Report loftily predicts that in 2040 it will have reduced 2021 emissions by 41 percent, but SBTi states that the power sector must reduce absolute carbon emissions by 77 percent between 2020 and 2030 to stay under 1.5°C. Significantly, IDACORP’s emissions reduction projections did not include market purchases, which it projects will increase from 3 percent to 15 percent over the next 20 years, nor does it include fugitive methane emissions from natural gas operations.

Investors should be on the alert for these kinds of disclosures – making unfounded environmental claims; touting either ambitions with no plans to achieve them or accomplishments that miss the mark; hiding material investment and emissions data in technical appendices; utilizing inappropriate baselines for emissions reduction that hide upward trends; and omitting significant sources of emissions from calculations and reports. We must evaluate companies on performance benchmarked against independent scientific assessments of what must occur to attain the goals laid out in the Paris Accord.

Amy Galland, PhD MBA
Founder and Principal, Empower Venture Partners