Net-Zero Tracker: Quality of corporate climate targets only increasing incrementally

That is according to the latest edition of Net-Zero Tracker, out today.

The Tracker analyses target-setting from nations, cities and publicly listed companies. On the latter, the analysis covers the world’s largest 2,000 listed companies, from the Forbes Global 2000 list.

Of these companies, 929 companies have set net-zero targets. More than 200 of these targets have been set within the past 12 months.

The aggregate annual revenue covered by net zero targets has increased from $3.8trn in December 2020 to $26.4trn today, equivalent to two-thirds of total annual revenue of the Forbes Global 2000.

Net-Zero Tracker’s team has therefore concluded that having a net-zero target is now a “corporate norm”. Nonetheless, the Tracker has revealed only minor improvements in the credibility of targets.

Only 4% of the targets set by Forbes Global 2000 companies would meet the minimum requirements for alignment with the UN-backed Race to Zero Campaign. These requirements were updated last year. They include things like not over-relying on carbon offsetting, having a clear investment plan, having science-based 2030 goals and not lobbying against progressive green policy.

A common pitfall is the exclusion of Scope 3 (indirect) emissions from the scope of targets. Less than four in ten of the businesses assessed have targets that fully cover Scope 3 emissions. This is concerning, as most large businesses will see the bulk of their climate footprint occurring indirectly.

Another issue is offsetting. Only 13% of the businesses have specified, publicly, quality conditions for their carbon credits.

“We find that the overall robustness of companies’ net zero targets remains low and collective progress too slow,” summarised report co-author Dr. Takeshi Kuramochi, senior climate policy researcher at NewClimate Institute.

Dr Kuramochi urged companies to update their targets and their implementation strategies, using the UN’s latest advice. Published to coincide with COP27 in Egypt late last year, the guidance can be used by cities, regions and investors as well as businesses.

Focus on fossil fuels

Of the 2,000 companies covered by Net-Zero Tracker, 114 are fossil fuel majors. The tracker reveals that 75 of these firms now have net-zero targets, up from 51 last year. But the Race to Zero excludes firms in this sector due to a lack of credibility in target-setting, and due to their historic contribution to the climate crisis.

Today’s new research cements these concerns. None of the 75 corporate targets fully cover Scope 3 emissions and none of the 114 companies have set a total end-date for fossil fuel activities.

The Tracker team has concluded that net-zero targets in this sector are “largely meaningless”.

Report co-author Dr Steve Smith, executive director of Oxford Net-Zero, said: “Expecting fossil fuel companies to go net zero might seem like asking turkeys to vote for Christmas. But even in a fossil-free world we will need clean energy for all and the ability to

sequester residual carbon. People in fossil fuel companies have the skills to build the future. By falling prey to the status quo, these companies are either delaying the net-zero transition or losing out on the industries of tomorrow and increasingly today.”

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