Emissions need to be cut by roughly 50% by 2030 to reach the target.
Companies listed on global stock exchanges are failing to keep to their emissions budgets, eroding the time left to avoid catastrophic climate change.
At this rate, listed companies are on track to make the world 2.9°C warmer by the end of the century, significantly missing the Paris Agreement target to stay below 1.5°C.
Emissions need to be cut by roughly 50% by 2030 to reach the target.
The latest MSCI Net Zero Tracker revealed the findings as the world prepares for the COP27 climate conference, at which countries gather in a bid to prevent a global climate emergency.
According to the MCSI data, listed companies will deplete their share of the global emissions budget for limiting temperature rise to 1.5°C by December 2026, two months earlier than was previously estimated in the Q2 2022 Net Zero Tracker.
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Sylvain Vanston, executive director for climate change investment research at MSCI said: "While investors need to hold companies accountable, the full burden of the net zero transition cannot fall solely onto them.
Policymakers need to set mandatory reporting of climate data that is consistent across the globe, enabling investors to then drive significant action."
The Net Zero Tracker found listed companies are on track to emit 10.9 gigatons of direct Scope 1 greenhouse gas emissions into the atmosphere this year.
This is up 1% from 2021, but down 4.4% from their pre-pandemic high.
MSCI's report - a quarterly gauge of 9,300 public companies' climate change progress based on the MSCI All Country World Investable Market Index (ACWI IMI) - highlights the challenge investors face to align their strategies and portfolios with a 1.5°C decarbonization pathway.
Only just over a third (36%) of listed companies have set a decarbonization target. Less than half (46%) have declared a net zero target.
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Self-declared corporate net zero targets also vary broadly. Analysis from MSCI shows some targets aim to balance carbon emissions with carbon removal, while others plan to reduce direct emissions but not from the company's suppliers or customers.
Some intend to simply boost the company's use of energy from renewable sources.
Only 41 listed companies in the Net Zero Tracker have set a net zero target approved by the Science Based Targets initiative (SBTi).
A further 577 companies have committed to set one in the future.
