Subscribe to my newsletter!
Sign up with your email address
status and trends of net zero target setting across countries and companies.
*Originally written on 6/16/2022. Twitter thread form here.
Net Zero Tracker is an organization that maintains a database on 4,000 entities that covers net zero targets for countries and the world’s largest corporations. They issue a “state of the union”-esque report on the state of Net Zero targets every so often and they published one this week full of interesting takeaways regarding Net Zero targets for the Fortune 2000.
Summarizing some of the notable takeaways on corporates below. Full report can be found here and is attached. In general, we’re seeing an increasing amount of Net Zero targets at a government and corporate level. However, the level of depth, transparency, and quality of these targets is still relatively weak. There is still a lot of work to be done in order to push towards robust targets: science-based near-term and long-term targets, publishing transition plans, minimal reliance on offsets and focus on removals for residual emissions, exhaustive coverage of scopes (to the extent it makes sense; Scope 3 still very much up for debate), and increased transparency on measurement and reporting. It’s an interesting barometer for anyone that wants to benchmark the progress of companies in their portfolio.
Takeaways:
- More than one-third (702 companies) of the world’s 2,000 largest publicly traded companies have net zero targets, up from one-fifth (417 companies) in December 2020
- Note this includes: carbon negative, carbon neutral(ity), climate neutral(ity), climate positive, GHG neutral(ity), net zero, zero carbon, zero emissions, 1.5°C compatible and science-based targets
- Goes to show how disparate the landscape currently is for Net Zero targets as these all mean different things!
- Only ~50% of the companies with NZ targets have any type of interim GHG emission reduction target, while ~20% instead have an interim non-GHG target such as procuring 100% renewable electricity by 2030
- ~25% of companies with NZ targets do not have any type of interim target
- At the sectoral level, results suggest that large and publicly visible companies with large emissions footprints are more likely to set net zero targets. For example, the fossil fuels industry has the second highest percentage of net zero targets (49%) among those industries with more than 10 companies in the Forbes 2000 list. The sectors with the third and fourth highest percentages, respectively, are also carbon intensive: the materials industry (e.g. steel and cement) and transportation services (e.g. airlines and shipping). These companies may find it especially difficult to decarbonize their value chains entirely, and therefore need high quality targets and actions that not only look good at first sight
- About half of the 700+ company net zero targets are embedded in corporate strategy documents or annual reports, while most other companies have only announced—in some cases have just declared a vague intention to set—net zero targets
- Some companies make self-reported claims to have achieved net zero already, mostly relying on contentious offsetting practices without necessarily decarbonizing their operations yet
- Twenty-eight companies claim to have achieved net zero, but 23 explicitly rely on offsetting and the offsetting practice of the remaining five could not be identified
- None of these claims has been externally validated to date
- Around one-third of all companies committing to net zero aim for 2040 or earlier
- Around 20% aim to achieve net zero before or by 2030; companies that claim to have net zero emissions today are included in this group
- Nearly 40% of all Forbes 2000 companies with net zero targets intend to use offsets, and close to 60% for those companies with targets for 2030 or earlier. The integrity of such offsetting remains contentious relating to problems such as additionality, permanence, avoidance of double counting, leakage, and the accuracy of quantified impacts
- The percentage of companies that explicitly consider the use of offsets and removals is considerably higher for companies targeting net zero by 2030 (57% of 151 companies) than companies with later target dates (45% of 109 companies for 2030–2040 and 35% of 419 companies for 2040–2050)
- These findings indicate that companies setting net zero targets for earlier dates may plan to meet their goals by relying on offsetting practices rather than making effective and deep emission cuts
- About 80% of the companies with net zero targets clarify their emission coverage, but only a few explicitly cover all emission scopes. Virtually all companies that report emission scope coverage in their published documents claim that their net zero targets cover full scope 1 and 2 emissions. For scope 3 emissions, by contrast, they identified just over a third (38%) of the companies that include all scope 3 emissions. The other 60% of the companies’ targets either only partially cover or do not cover any of their scope 3 emissions.
- Only one-third of all corporates pledging net zero currently meet the minimum procedural ‘starting line’ criteria; less than 5% meet the additional ‘leadership practice’ criteria. The vast majority of corporates have so far not managed to meet necessary initial conditions for robust net zero target setting
- There’s been a host of Net Zero target literature reviews published in the last 12-24 months. The report provides a nice summary table of the reports and what they covered/measured.
Copy link