Morgan Stanley Revises Climate Targets Amidst Sluggish Global Transition

Morgan Stanley has revised its climate goals, adjusting its emissions targets to a range of 1.5 to 1.7 degrees Celsius rather than a strict 1.5 degrees, a shift motivated by slower-than-anticipated progress in the global transition to a low-carbon economy. This update marks the bank's first major climate policy revision in three years, as its latest report acknowledges that technological, policy, and demand-side barriers complicate the ability to meet previous targets.

The bank’s chief sustainability officer highlighted that hurdles such as a deceleration in electric vehicle uptake, delays in biofuel adoption in aviation, and persistent challenges within the power sector have impacted Morgan Stanley’s ability to aggressively reduce emissions within its corporate lending portfolio. To adapt, Morgan Stanley is setting sector-specific targets for six key industries: energy, power, autos, chemicals, mining, and aviation, aiming for reductions by 2030.

Under the new plan, Morgan Stanley will use a "physical intensity" method for tracking emissions per unit of production or energy generation, aligning with broader industry standards. The baseline year for tracking has also been reset from 2019 to 2022 to leverage more accurate data.

The targets set include a reduction of 12-20% in operational emissions for the energy sector, with end-use emissions slated to decrease by 10-19%. In the power sector, emissions are expected to drop 45-60%, while the autos sector faces a target reduction of 29-45%, contingent on improvements in electric vehicle adoption. For aviation, emissions are projected to decline by 13-24%, supported by sustainable aviation fuel adoption. The chemical and mining sectors have targeted reductions of up to 28% and 31%, respectively, as they explore emerging technologies like green hydrogen and renewable energy integration.