Most corporations support net-zero, but only one-third plan to address all of their indirect emissions
A major new analysis of the global net-zero movement has found that the share of revenues from listed firms with targets of some kind has increased almost four-fold within a year. Nonetheless, there is much to be done on making these targets credible.
Published by Net-Zero Tracker today (25 November), the post-COP26 stocktake of net-zero targets shows an “explosion” of interest in the private and public sectors – but still only gradual improvements in the integrity of delivery plans.
The stocktake reveals that the total cumulative combined global revenue covered by public company net-zero targets amounts to around $19.5trn. This figure is up almost fourfold year-on-year and represents almost 75% of total revenues. Only publicly listed companies are included in the stocktake.
Also revealed is a gradual improvement in the credibility of corporate targets, with the stocktake accounting for whether they are science-based and whether companies are properly planning for delivery. 207 businesses had set targets that met what Net-Zero Tracker has dubbed the minimum procedural standards, up from 110 last year. The amount of revenue from this cohort of businesses stood at around $8trn, up from around $2.1trn last year.
There was also a doubling, year-on-year, in the number of companies meeting Net-Zero Tracker’s criteria for leadership on decarbonisation. There are now 22 firms in this cohort, with combined revenues of almost $1.35trn.
Nonetheless, the stocktake revealed that most businesses (68%) have not set net-zero targets that cover all of their indirect (Scope 3) emissions. 43% of businesses have targets that cover no Scope 3 emissions.
This could majorly undermine the credibility of net-zero targets. CDP has estimated that, for the average large multinational firm, Scope 3 emissions will be 11.4 times higher than direct emissions. Net-Zero Tracker is urging companies to take advantage of the broad opportunities for decarbonisation upstream and downstream.
Net-Zero Tracker is also expressing concern about a potential over-reliance on carbon offsetting and a lack of progress in firming up offsetting plans. 43% of the businesses assessed by revenue are planning to use offsetting to meet their net-zero targets, but two-thirds of this cohort have not specified any information on how and why carbon credits will be used.
Oxford Net-Zero’s executive director Dr Steve Smith said: “We are seeing a huge number of net-zero plans that keep the door open to buying offset credits. That is worrying because the market is awash with cheap credits of dubious quality. We can't offset all the way to real, global net zero. Leaders need to prioritise cutting their own emissions and set out clear rules and limits to their offsetting."
Nations, cities and regions
As well as tracking targets from corporates, Net-Zero Tracker’s update provides a snapshot of trends from nations, cities and regions.
Commitments from these actors now cover 90% of GDP, 88% of the global population and 88% of global emissions.
Nonetheless, most countries (55%) with net-zero targets currently have them set after 2050. The Intergovernmental Panel on Climate Change (IPCC) has stated that bringing emissions to net-zero by 2050 at the latest will give the best chance of limiting the global temperature increase to 1.5C, beyond which, the worst impacts of the climate crisis will be felt.
As for city targets, there has been an 87% increase year-on-year in target setting. However, two-thirds of the targets do not yet have supporting plans. Most exist only as pledges or discussions. As with corporates, Net-Zero Tracker is urging cities to clarify their plans for offsetting.