An inventory of net zero pledges found gaps among the world’s biggest companies in their promises to reduce GHG emissions.
The Net Zero Tracker reported its latest review of climate pledges from nations, regions, and corporations. The initiative noted huge year-on-year increases in the number of entities that have made promises to cut their GHG emissions.
But an in-depth assessment revealed some shortcomings in those climate promises. For instance, in almost half of the cases, companies expressed plans to reduce emissions to net zero but without clear details on how.
Net Zero Tracker examines publicly available data for about 200 countries and large public companies. It’s run in part by the UK-based Energy and Climate Intelligence Unit (ECIU) and the University of Oxford.
Their 2022 annual inventory report covered 702 companies with net zero targets.
Net Zero Pledges Report Key Findings
The Net Zero Tracker report analyzed the net zero pledges of businesses and governments. It involves published plans on how they will achieve their goals, actions they are currently taking, and published progress reports.
Notably, the report found that firms responsible for high levels of emissions (oil companies) were more likely to declare net zero plans.
But only 38% of all those firms studied said their emissions reductions will cover all “Scope 3” emissions. Scope 3 emissions include the emissions produced by the end-use of a company’s product. It’s an important factor when assessing the climate impact of firms that produce oil, gas, and coal.
Here are the other major findings of the net zero pledges inventory for 2022.
- Fossil fuel firms had the 2nd highest percentage of net zero goals, at 49% of the total.
- Carbon offsetting or buying carbon credits for emissions reduced elsewhere is found dominant among corporate strategies.
- About 40% of the Forbes 2000 companies with a net-zero target plan to use offsets, despite concerns about the lack of regulation.
- 702 companies on the Forbes Global 2000 now have net zero targets, up from 417 in 2020.
- But 65% of those firms show lacking clear information about the GHG being measured, or how much they intend to rely on carbon offsets to meet their targets.
- There’s a dramatic increase in the number of national laws and policies covering net zero targets. These went from covering 10% of national GHG emissions in 2020 to 65% in June 2022.
- The number of big cities with a target doubled, up from 115 in 2020 to 235 now. But 900 large cities worldwide still have no net zero targets.
Given that analysis, John Lang, one of the authors noted that governments need to have legal standards and regulations in place to ensure net zero progress by companies. He also added that:
“At the moment, companies are confused about what’s needed from them… They don’t know what information has to be disclosed… We have to have mandatory, top-down regulations to guide them.”
Another author remarked that corporate ambitious interim targets are vital to delivering net zero and limiting cumulative emissions. He said that:
“Clear interim targets can be the solution to both the climate and energy crises; by providing the guardrails to accelerate the shift away from fossil fuels.”
Corporate Net Zero Commitments
During the Glasgow conference (COP26) last year, the UN formed an expert group to come up with net zero standards for the private sector.
Article 6 of the Paris Agreement is at the top of each nation’s agenda at COP26. It governs the structure of carbon offsets and carbon credits as part of climate goals.
Large companies have been setting ambitious net zero pledges such as these major airlines, Chevron, Del Monte Foods, Disney, Stellantis, and more.
Some follow the world’s target to hit net zero emissions by 2050 while others set targets 10 years earlier.
The firms believe that they have lofty climate goals already. But the report asserted that most of them have “unacceptably low” targets to be carbon neutral by 2050. Their long-term plans will not do much to halve emissions in the next 8 years that’s vital to stem climate change.
The diagram below shows the state of corporate climate commitments.
To help encourage action on corporate net zero targets, the UN again launched a group aimed at businesses, investors, cities, and regions last March 2022.
The goal is for the entities to make transparent and credible targets with stronger standards. It’s also to speed up the implementation of those plans.
Other initiatives were in a place like increased financial reporting requirements to boost and guide corporate net zero pledges. Examples are the Taskforce on Climate-Related Financial Disclosures and the proposed rules by the Securities and Exchange Commission.
Here’s the per sector ranking in terms of the most net zero pledges:
- hospitality
- fossil fuels
- materials such as steel and cement,
- transportation,
- food & beverage and
- agriculture
The UK and Italy have the most companies with at least some net zero goals like 72% and 70% of their businesses have targets, respectively. But in the U.S., only 36% of companies have made at least some net zero initiatives.
Despite flaws and credibility gaps, one more author stated that it’s still possible that the flood of net zero promises can create a virtuous cycle. According to him:
“It requires companies to step up, regulators to step up, civil society to be ready and researchers so that this really improves over time.”
The Net Zero Tracker 2022 report analyzed the inventory of net zero pledges from its database of more than 4,000 entities.