One fifth of the world’s largest companies have set net zero targets.

According to a new report by the Energy and Climate Intelligence Unit (ECIU) and Oxford Net Zero, 21% of the world’s 2,000 largest public companies now have net zero commitments.

The majority of these companies also have interim targets, a published plan and a reporting mechanism, with over a quarter meeting a full set of ‘robustness criteria’. However, companies are warned that if they do not complement targets with proper governance and transparency mechanisms, including offsetting reliance, they risk being accused of greenwashing.

The report, Taking Stock: A global assessment of net zero targets, is the first systematic analysis of net zero commitments across countries, sub-national governments and major companies. The report quantifies the extent to which net zero targets reach a certain minimum set of robustness criteria, which has been set out by the UN Race to Zero Campaign. Currently, 20% of net zero target meet this.

The report also found that 61% of countries, 9% of states and regions in the largest emitting countries and 13% of cities with over a population of 500,000 have now committed to net zero.

Richard Black, Senior Associate at ECIU and lead author of the report, said “Although net zero as a concept is still in its infancy, it is already driving policy change. Clearly though, to keep the world on track to global climate targets we need more countries, states, regions and companies to sign up to targets and existing pledges to be improved.

“There is logic to setting a target and then building a plan and reporting mechanisms to meet that, but companies and countries alike will need to make progress on this in the run-up to COP. Countries such as Japan and the US will need to back their net zero ambitions with nearer-term 2030 emissions targets.”

A lack of clarity was also identified around how both countries and companies alike will use offsetting to meet targets, with warning that nature-based offsets cannot be heavily relied on due to their planetary limits.

Co-author Dr Thomas Hale from the Blavatnik School of Government, University of Oxford added “ Although some offsetting may be needed for so-called “residual emissions” in certain sectors, the most important priority is immediate emissions reductions. If every company and country relies on offsets and not enough on actual emission cuts, we simply won’t be able to accommodate these globally.”

In the lead up to COP26, focus will intensify on the number of entities making net zero pledges and their potential to help keep climate change within ‘safe’ limits. While the report records if countries have interim targets, additional research is required to interrogate how compatible these interim targets are with net zero goals.

Read the full report here.

26 March 2021

Climate Action