Hundreds of businesses drop net-zero commitments due to Scope 3 challenges

Almost 240 businesses did not follow through on their commitment to set verified net-zero targets or 1.5C-aligned science-based emissions targets, with many citing Scope 3 emissions and uncertainties about the future as major challenges.

Hundreds of businesses drop net-zero commitments due to Scope 3 challenges

Businesses identified Scope 3 emissions as a major barrier to net-zero commitments.

Since 2019, more than 1,000 companies joined the Business Ambition for 1.5C campaign, an effort to raise the ambition on climate action and push companies to set science-based targets aligned with 1.5C as opposed to 2C or well-below 2C.

Out of these companies, 971 were analysed for a recent report assessing the campaign’s impact. The study, from the Science-Based Targets Initiative (SBTi) excluded companies that underwent mergers, acquisitions, or awaited updated sector-specific guidance.

According to the findings, 84% of the analysed companies either set a target or are in the validation process.

Additionally, 96% of the surveyed companies rated the value of having science-based targets as good to very good, and 71% strongly agreed or agreed that the campaign delivered on their motivations for joining.

The top five countries for companies actively participating in the campaign are the UK, the US, France, Sweden and Germany.

However, the report unveiled a major setback, as 239 companies had their net-zero commitments removed. Nearly 60% of these companies had near-term targets in place.

The SBTi requires companies and financial institutions to submit science-based targets within 24 months of committing.

Failure to comply results in being marked as “Commitment Removed” on the SBTi Dashboard, due to a change in commitment compliance policy implemented in January 2023.

Prominent brands including Diageo, Microsoft, Unilever, Marks & Spencer and Proctor & Gamble had their commitments removed from the SBTi dashboard.

Industry insights

The SBTi conducted a survey among the participating companies last month. 54% of respondents identified Scope 3 emissions as a major barrier to setting net-zero targets, in addition to uncertainties about future technologies (53%).

Additional hurdles cited by respondents included a lack of certainty in achieving the target (35%), the absence of a published net-zero standard (27%), no sector pathway available for the company (23%), insufficient emissions data to set targets (22.5%), the abstract nature of net-zero goals (22%), and potential conflicts with regulatory frameworks (18%).

The report concludes that the delicate balance between ambitious climate goals and practical implementation remains a critical issue in the journey toward a sustainable transition.

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