A recent study by the Net-Zero Tracker initiative reveals that the number of large companies setting net zero emissions goals has doubled since 2020. However, there are still concerns about whether these targets are credible.
The analysis covers the world’s largest 2,000 listed companies, such as Amazon, Lloyds Banking Group, Sainsbury’s and Walmart, from the Forbes Global 2000.
The data shows that 929 companies have set net zero targets, with over 200 of them doing so in the past year. This is an increase from 417 in December 2020 to 702 in June of last year. The total revenue covered by these targets has jumped from $3.8 trillion (£3trn) in December 2020 to $26.4 trillion (£21trn), which is about two-thirds of the Forbes Global 2000s annual revenue.
Quantity vs credibility
Although more companies are setting net zero goals, the assessment found that only 4% of the targets set by the companies actually meet the minimum requirements for the UN-backed Race to Zero Campaign. These requirements were updated last year and include things like reducing over reliance on carbon offsetting, having a clear investment plan, setting goals based on scientific evidence for 2030, and not working against green policies.
One common problem is that many businesses don’t include indirect emissions (scope 3 emissions) in their targets. Less than 40% of the companies assessed have targets that cover these indirect emissions, even though they comprise a significant part of their overall emissions, sometimes over 70%, if not more.
Another issue, according to the study, is that only 13% of companies specify quality conditions for the carbon credits they use for offsetting, which means they may be investing in offsets that do not provide the reductions expected.
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Dr Takeshi Kuramochi, senior climate policy researcher at NewClimate Institute, said the findings of the stocktake confirmed long-standing fears that “the overall robustness of companies’ net zero targets remains low and collective progress too slow”.
“To become true climate leaders, companies must reflect seriously on the UN Expert Group’s recent markers of credibility and other Paris-aligned standards, and urgently update their currently weak plans with robust implementation strategies,” he said.
Fossil fuels and net zero
The study also looked at a major political issue leading up to COP28, which will this year be hosted by the UAE; the use of fossil fuels.
The study found that the number of the world’s largest 114 fossil fuel companies with net zero targets increased to 75 in May 2023, up from 51 in June 2022, an increase of almost 47%. However, there remain doubts about the credibility of these companies environmental targets due to their role in causing climate change.
Most of the companies’ net zero targets did not include or clearly explain how they plan to reduce the emissions caused by other companies and customers using their products. Furthermore, these companies are yet to commit to completely stop extracting or producing fossil fuels, even though the United Nations says that credible net zero targets should include specific goals to phase out the use of and support for fossil fuels.
“Expecting fossil fuel companies to go net zero might seem like asking turkeys to vote for Christmas,” said Dr. Steve Smith, the executive director of Oxford Net-Zero. “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.”
About the Net Zero Tracker
The Net Zero Tracker is a collaboration between the Energy & Climate Intelligence Unit (ECIU), Data-Driven EnviroLab (DDL), NewClimate Institute, and Oxford Net Zero. Its purpose is to make net zero targets set by countries, states, cities, and companies more transparent and accountable.
The Tracker collects data on the targets set and evaluates different factors to determine how serious these entities are about cutting their net emissions to zero. It helps to measure their commitment and progress in achieving a carbon-neutral state.
