The number of companies setting net-zero targets has risen by more than 40% but the quality of target-setting must urgently improve, Net Zero Tracker has found.
The organisation assesses net-zero targets in the Forbes Global 2000 list of the world’s largest companies. It found the number of company net-zero targets has risen by more than 40% in 16 months — from 702 in June 2022 to 1,003 in October 2023 – bringing the aggregate annual revenue covered by net-zero targets to $27trn.
The Net Zero Tracker’s methodology for assessing climate commitments supports the UN secretary-general’s High Level Expert Group’s guidance on ensuring the credibility and accountability of net-zero pledges by non-state entities and also ‘signposts’ to other accountability-geared organisations such as Race to Zero.
Despite continued progress on the quantity of corporate target-setting, the organisation warns that the integrity of company mitigation targets should urgently improve if they are to be achieved in line with the Paris Agreement’s temperature targets.
“While most companies set net-zero pledges with good intentions, many of the pledges are still based on self-defined emission boundaries and scope and thus not aligned with the global net-zero emission goal of the Paris Agreement,” said Takeshi Kuramochi, senior climate policy researcher at NewClimate Institute.
Net Zero Tracker found just 37% of corporate net-zero targets cover Scope 3, and just 13% signal they are using offsets responsibly. In fact just 4% even meet the ‘starting line criteria’ set out by the UN’s Race to Zero campaign.
“Many companies need to urgently refine their pledges and implementation strategies in line with the UN expert group’s recent markers of credibility and other Paris-aligned standards,” Kuramochi added.
In the UK, despite government rollbacks on net-zero commitments, Net Zero Tracker found the majority of UK-based companies within the Forbes 2000 have committed to the net-zero transition, with 94% setting targets and only two companies (private equity firm 3i and clothing company Beria) not setting mitigation targets.
“Having signed net zero into law four years ago, it’s remarkable that such progress has been made,” remarked Chris Skidmore MP, chair of the UK Net Zero Review.
“Now is the time for the UK to press this advantage by accelerating policies to support the engines of our economy to deliver on net zero.”
The Net Zero Tracker will launch its seventh analysis of global net-zero pledges at COP28 in Dubai in just under a month. The analysis will show the level of alignment of the world’s largest 4,000 entities with the UN’s guidance that credible net-zero commitments require specific targets for ending the use and/or support for fossil fuels, including whether they claim to align with the IPCC and IEA pathways.
“A clear line in the sand on net zero has surfaced. Countless net-zero targets are credibility light, but now we can say for certain that most of the world’s largest listed companies are on the right side of the line on net-zero intent,” John Lang, project lead at the Net Zero Tracker (ECIU), said.
“With credible net-zero target setting a proxy for forward-thinking, future-proofing companies, it begs a simple question: are the firms we’re investing in, working for and buying from on the right or wrong side of the line?”