Net-Zero Tracker: Targets from corporates, cities and regions still suffering from credibility crisis

While an increasing number of big businesses, cities and regions are setting net-zero targets, there has been precious little progress in improving target credibility. Most long-term ambitions are still limited and scope and not backed with interim goals.

Net-Zero Tracker: Targets from corporates, cities and regions still suffering from credibility crisis

The Census will be active from today (1 May) until 30 June 2024.

That is the headline takeaway from the latest analysis from Net-Zero Tracker. Published at COP27 today (15 November), the analysis looks at the public commitments of the world’s 2,001 largest companies, as well as 713 regions and 1,177 cities.

The analysis reveals a continued uptick in top-level net-zero target setting by all of these so-called non-state actors. 116 of the regions now have a net-zero commitment, up from 110 12 months ago. The increase within that timeframe for cities was 180 to 241, and for corporations, from 617 to 799.

When it comes to the deadline of corporate targets, most companies with net-zero commitments (59%) have set a deadline between 2041 and 2030. 21% have a target on or before 2030 and 16% have a target between 2031 and 2040.

Net-Zero Tracker warns that “pledges alone are not a sign of climate leadership – they must be accompanied by a deep emission reductions commitment to be meaningful.” The document states that “not all net-zero pledges have to be created equal, but most still lack the most basic of details necessary for delivery”.

Common pitfalls

The analysis looks at a number of credibility factors for long-term net-zero targets, including their scope, their interim goals and whether actors are properly planning to finance and resource their delivery.

Across the board, there was a very slow uptick in the development of interim targets. Only 11% of all the regions assessed and 10% of all the cities assessed have interim targets to reduce emissions on the road to net-zero. The proportion is higher in the corporate space – 20% – but that still leaves the vast majority of big businesses open to increasing their emissions in the coming years.

Net-Zero Tracker also looked at whether corporate net-zero targets had credible scopes, given that most large businesses will see the majority of their climate impact coming from Scope 3 (indirect) sources. CDP has previously stated that the average large multinational generates 11.4 times more emissions from its supply chains than its operations. Unfortunately, only 15% of all the companies assessed have net-zero targets that “fully” cover emissions from all scopes.

The analysis throws up concerns around corporate preparedness to deliver deep emissions cuts and to consider the impact of their net-zero transitions on people. On the former, Net-Zero Tracker states that there have been “no significant improvements” in transparency on the potential use of credits or the percentage of actors committing not to use credits. Only 1% of companies have ruled out the use of credits altogether. In comparison, 20% have stated plans to use them but revealed no restrictions.

For context, the Science-Based Targets initiative’s (SBTi) net-zero standard requires companies to reduce emissions across all scopes by at least 90% by 2050 at the latest before offsetting. The standard launched in October 2021 and is the most popular of its kind.

Net-Zero Tracker also assessed whether the non-state actors were producing transition plans. These detail things like interim commitments, investment plans, business model plans and interventions to support affected workers and communities.

Such plans have been produced by 9% of regions, 12% of cities and 24% of companies. This latter statistic is welcome, given that the UK is set to mandate transition plans from some large businesses, and that other economies will likely follow suit.

However, Net-Zero Tracker has expressed concerns that only 4% of corporates mention equity or fairness.

The report states: “Without a plan, a pledge is simply an aspiration without a means to achieve it. And if that plan is not published, citizens, customers and investors cannot know how net-zero will be achieved nor how they can contribute.”

Credibility push at COP

As COP27 began, the UN stated that major focus should be given to the need to ensure that net-zero targets set by nations and non-state actors alike are credible.

The High-Level Expert Group on Net Zero Emissions Commitments of Non-State Entities subsequently published a new set of recommendations on setting short, mid and long-term commitments. These include prioritising deep emissions reductions, in line with science, over offsetting, and ensuring that any offsets which are used are robust.

Then, on Friday (11 November), the International Organisation for Standardisation (ISO) published a net-zero ‘Guidelines’ paper. The paper is intended to be a “single core reference text” for any organisation wishing to credibly use terminology relating to net-zero emissions and create meaningful targets. It is available for free.

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