Net zero targets now cover two-thirds of world’s largest companies’ revenue – but credibility is still lacking

More than half of the world’s 2,000 largest publicly listed companies now have a net zero target, but only 4% of those meet the UN Race to Zero criteria.

This is according to the latest analysis published by the Net Zero Tracker after assessing the 1,000th net zero strategy published by a member of the Forbes Global 2000 list.

The tracker found that net zero targets now cover US$27 trillion, or 66% of these companies’ annual revenue – but one-third of the companies on the list are yet to set any emissions reduction goals.

John Lang, Project Lead at the Net Zero Tracker, commented: “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 companies have shifted to the right side of the line on net zero intent.”

Net zero target credibility

In its latest Net Zero Stocktake, published last June, the organisation warned that the quality of carbon reduction targets set by companies needs to urgently improve if we are to meet the goals of the Paris Agreement.

It found that only 4% of net zero commitments meet UN Race to Zero ‘Starting Line criteria’. These include coverage of all emission scopes, yet just 37% of targets include Scope 3 emissions – by far the largest portion of most companies’ carbon footprint.

The criteria also state that clear conditions should be set for the use of offsets, something only 13% of corporate net zero targets specify. For the Net Zero Tracker, the general lack of specificity around the use of offsets signals “an overreliance on low quality offset credits, rather than emissions reductions”.

“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. 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,” warned Dr. Takeshi Kuramochi, Senior Climate Policy Researcher at NewClimate Institute.

Read also: Carbon removals are now part of EU net zero strategy - what CSOs need to know

UK businesses defy government’s net zero backsliding

In a more focused analysis of the UK corporate landscape, the tracker discovered that the government’s recently announced decarbonisation delays have had no impact on companies: the wide majority (94%) of UK firms in the Forbes2000 have a net zero target in place.

“The bulk of the UK’s largest businesses are committed to net zero - and are planning and investing to capture the opportunities of the transition. (...) However, the recent stop-start approach to policy is putting business investment at risk and undermining investor confidence. 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,” said Chris Skidmore, a Member of Parliament and chairman of the UK Net Zero Review.

The first global stocktake, a five-year checkpoint on worldwide climate action included in the Paris Agreement, will be released during COP28 next month. In the run-up to the event, data organisations are ramping up efforts to provide a clear picture of corporate climate initiatives. Next week, NewClimate Institute is due to publish its State of Climate Action 2023, a sector-by-sector roadmap to close the GHG emissions gap and limit global warming to 1.5°C.