Companies with net-zero goals risk allegations of greenwashing unless they complement targets with proper governance and transparency mechanisms, a new report by the Energy and Climate Intelligence Unit (ECIU) and Oxford Net Zero showed on Tuesday.
The report entitled Taking Stock: A Global Assessment of Net Zero Targets, which is regarded as the first systematic analysis of net-zero commitments across countries, sub-national governments and major companies, finds that the majority of at least one-fifth of the world's 2,000 largest public companies have interim targets, a published plan and a reporting mechanism.
The findings of the report show that 124 countries, 73 states and regions, 155 cities and 417 companies have made some form of commitment to net zero.
The report showed that the stakes are high if there is no follow-through on these commitments given that countries with net-zero targets represent 61% of global emissions and 52% of the global population, while Australia and Russia are in the minority and without targets.
These companies together represent sales of nearly $14 trillion, or 33% of total sales across the top 2,000 public companies.
However, the majority of targets across all entities are due by 2050, while only 153 companies have set net-zero commitments by 2030.
"While the rapid uptake of net zero targets is encouraging, we need much more clarity from actors on how they plan to get there. It’s particularly important that actors clarify their approach to offsetting," Thomas Hale, associate professor at Blavatnik School of Government, University of Oxford and the co-author of the report said.
Hale said that although some offsetting may be needed for so-called "residual emissions" in certain sectors, the most important priority is immediate emissions reductions.
According to the report, there is a lack of clarity around how countries and companies alike will use offsetting to meet targets.
"If every company and country rely on offsets and not enough on actual emission cuts, we simply will not be able to accommodate these globally," Hale noted.
The report also warns that in the lead up to the COP26 climate summit planned to take place in Glasgow, the focus will intensify on the number of entities making net-zero pledges and their potential to help keep climate change within "safe" limits and renewed pledges for 2030 under the Paris Agreement.
"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," lead author and Senior Associate at ECIU, Richard Black, said.
“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," he noted.
By Nuran Erkul Kaya