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World’s largest companies lack ‘credibility’ in their net zero plans

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Many of the world’s largest companies face a “major credibility gap” in their plans to slash their carbon emissions as part of efforts to tackle climate change, according to a study from Net Zero Tracker.

The climate charity analysed the Forbes 2000 largest companies list and found that more than one third (702) now have net zero targets, up from one fifth (417) in December 2020. However, 65 per cent of corporate targets do not yet meet minimum procedural reporting standards, it said.

Recent years have seen an increasing number of countries setting and strengthening their carbon reduction commitments, with some 91 per cent of global GDP now captured by net zero targets proposed national by governments, up from 68 per cent in December 2020.

But in contrast to the near-universal coverage of country-level net zero targets, the robustness of targets set by “non-state actors” is “alarmingly weak”, Net Zero Tracker said.

Frederic Hans, the report’s co-lead author and climate policy analyst at NewClimate Institute, said: “The growth of net zero targets has provided a governance framework of unprecedented scale and scope – carving out an achievable path to global decarbonisation.

“But our analysis clearly shows major flaws in current net zero target-setting practice across all entities.”

Dr Takeshi Kuramochi, senior climate policy researcher at NewClimate Institute, said: “We are now at a watershed moment where 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 decarbonisation.

“Those companies, cities and states without a target will likely start to look like the odd ones out and those with targets must expect deeper scrutiny of their pledges.”

About half of the 702 firms have embedded targets in their corporate strategy documents or annual reports, while most others have only announced net zero targets.

The Fossil Fuels industry has the second highest percentage of net zero targets (49 per cent) among those industries with more than ten companies in the Forbes 2000 list.

The sectors with the third and fourth highest percentages, respectively, are also GHG-intensive: the Materials industry (e.g. steel and cement) and Transportation Services (e.g. airlines and shipping).

These results suggest that reputation-conscious companies with large emissions footprints are more likely to set net zero targets “that are symbolic in nature”, the report said, without the detailed plans required to achieve them. It added that in some cases this amounts to “greenwashing” as part of efforts to promote a more environmentally conscious image without the required changes to their business model.

Richard Black, senior associate at the Energy & Climate Change Intelligence Unit (ECIU), said: “Ambitious interim targets are vital to delivering net zero and limiting cumulative emissions. But even leaving aside the climate emergency, the severe disruption to global fossil fuel supplies due to the Russian invasion demands that countries rapidly cut their dependency.

“Clear interim targets can be the solution to both the climate and energy crises; by providing the guardrails to accelerate the shift away from fossil fuels.”

Last month, ministers from the G7 countries – Canada, France, Germany, Italy, Japan, the UK and the United States – agreed to significantly curb the use of coal and other fossil fuels in electricity production, although they did not set a target date for doing so.

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