Most Corporate Net-Zero Targets Are Weak And Vague, Report Says

(Bloomberg)

Companies announcing plans to eliminate planet-warming greenhouse gas emissions have so far not managed to meet the most basic criteria for a robust net-zero goal, according to a new analysis of targets.Only a third of the plans fulfill what Net Zero Tracker report authors consider the bare minimum standards of reporting emissions reduction goals, which include making a pledge, explaining the steps, taking immediate action and reporting at least annually.

The study looked at pledges by 702 companies on the Forbes Global 2,000 list to achieve net-zero emissions. The research was led by the Energy & Climate Intelligence Unit, Data-Driven EnviroLab, the NewClimate Institute and Oxford Net Zero.

A net-zero target aims to cut greenhouse gas emissions where possible and compensate for those that can’t be eliminated with offsets or technologies that can capture carbon. Ideally this will zero out a company’s contribution to global emissions.

“We are now at a watershed moment,” report author and senior climate policy researcher at NewClimate Institute Takeshi Kuramochi said in a statement. “Peer pressure to hastily set net-zero pledges, especially in the business sector, could result in either a mass flow of greenwashing — or a fundamental shift towards decarbonization.”

The report found that about half of the companies that have pledged to eliminate their emissions have included details on their strategy in corporate reports, with the rest just announcing the target. Nearly 40% of the companies intend to use offsets as part of their plan to eliminate emissions and that share increases to 60% for companies with net-zero targets for 2030 or earlier, suggesting they’re aiming to compensate for existing emissions, rather than eliminating them.

ROO.AI Oil and Gas Field Service Software

Governments, companies and cities have rushed to announce net-zero goals over the past year and a half amid growing pressure to slow the pace of climate change, according to the report. But even as the momentum continues, pledges alone won’t deliver the necessary reduction in global temperature increase needed to prevent catastrophic global warming. The focus needs to shift to the targets’ quality, authors say.

“We need to shift from voluntary or aspirational pledges to concrete implementation plans with real accountability,” said Thomas Hale, an associate professor at the Blavatnik School of Government at University of Oxford. “The smartest companies have seen the writing on the wall and are quickly moving ahead, but too many are still imagining that some sort of clever ESG accounting is going to allow them to avoid deep decarbonization.”

Less than 5% of the companies analyzed fit “leadership practice” criteria, which requires setting short-term emissions targets on top of a longer-term net-zero goal. These targets should also be followed up with assessments of direct and indirect emissions.

Virtually all companies report Scope 1 and 2 emissions, which are within an organization’s control. But just 38% account for Scope 3 emissions, which may include emissions by suppliers or any use of sold products a company manufactures. Those emissions often make up the bulk of a company’s climate footprint.

Even when Scope 3 emissions are reported, they’re not necessarily validated by third parties and underreporting could be significant, according to the report.