Only 4% of top companies net-zero targets meet UN climate guidelines

Half of the world’s 2,000 biggest listed companies have set a target to get to net-zero emissions by 2050 but just a fraction meet tough United Nations guidelines for what constitutes a quality pledge, a report released on Monday shows.

That is according to the latest analysis of the Forbes Global 2000 – a list of the world’s largest companies – by Net Zero Tracker, an independent data consortium including Oxford University. 

It says that the number of companies setting net zero emissions targets has risen by 40 per cent from 702 in June 2022 to 1,003 in October 2023. 

Quantity over quality?

The group warns, however, that despite progress in terms of the number of companies setting net-zero targets, there is an urgent need to ensure these targets are credible and deliver on promised emissions reductions. 

Just 4 per cent of targets meet the criteria laid down by the UN’s Race to Zero campaign for example, by ensuring that they cover all greenhouse gas emissions, start to cut them immediately, and include an annual progress update on interim and longer-term targets.

Of those to set a target, just 37 per cent had one that covered their Scope 3 emissions – those not produced by the company itself but tied to its value chain. Just 13 per cent had a quality threshold for the use of carbon offsets.

The report suggests there is an overreliance on low-quality carbon offset credits rather than emissions reductions. 

A clear line in the sand

The pace of change among governments and corporations is set to form a central part of the COP28 climate talks in Dubai starting in late November.

“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,” said John Lang, Project Lead for the Net Zero Tracker.

“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?”