A new study from climate pledge tracking initiative Net Zero Tracker released today indicated a sharp increase in corporate net zero commitments over the past year, while revealing that the quality of pledges across countries, regions and companies may be insufficient to achieve global climate goals.
Net Zero Tracker (NZT), a collaboration led by Oxford University’s Net Zero Initiative, the Energy & Climate Intelligence Unit, Data-Driven EnviroLab, and NewClimate Institute assesses global net zero targets, in order to increase transparency and accountability of net zero targets pledged by nations, states and regions, cities and companies. The analysis released by the organization today showed that while net zero pledges have grown to cover a substantial portion of global emissions, lack of clarity in areas such as scope 3 value chain emissions and the use of offsets makes the assessment of commitments difficult.
At the country level the study found that net zero pledges have expanded to now cover 90% of GDP and 88% of global emissions. Only 10% of these are written into law and 43% are in a policy document, however, while 20% constitute declarations or pledges and 14% are at the proposal or discussion stage. The level of ambition varies as well, with more than half of the pledges by percent of global emissions targeting a net zero date after 2050. China, for example, by far the largest emitter of greenhouse gas emissions has set a 2060 target, as has Saudi Arabia, the world’s largest exporter of crude oil.
Richard Black, Senior Associate, Energy & Climate Change Intelligence Unit (ECIU), said:
“90% of GDP is now covered by a net zero target of some kind, but there are huge variations in the robustness and credibility of these targets. The Net Zero Tracker allows all stakeholders to see these variations in all their detail and so better hold their countries, regions, cities and businesses to account, highlighting shortfalls and driving standards up.”
Corporate net zero commitments have grown to cover nearly $20 trillion in revenues. While only $8 trillion covered under these pledges meet ‘minimum procedural standards,’ according to NZT, this measure has seen significant improvement, rising nearly 4-fold from $2.1 billion last year.
One of the key areas in which the pledges lack clarity is the utilization of offsets in order to achieve net zero. Carbon offset projects that counteract the release of greenhouse gases are used by companies and governments as a bridge to their own absolute emissions reduction efforts, or to balance difficult to avoid emissions in order to reach net zero. The quality of offset credits, however, varies significantly, and the availability of offset projects to counteract massive amounts of unabated emissions is unlikely to be sufficient.
According to the NZT analysis, more than 90% of country targets, and nearly half of company commitments fail to specify how offsets will be used to reach their goals, and only 10% of companies have committed to avoiding the use of offsets.
Dr Steve Smith, Executive Director, Oxford Net Zero, said:
“We are seeing a huge number of net zero plans that keep the door open to buying offset credits. That is worrying, because the market is awash with cheap credits of dubious quality. We can’t offset all the way to real, global net zero. Leaders need to prioritise cutting their own emissions and set out clear rules and limits to their offsetting.”
Many net zero plans also fall short in their treatment of Scope 3 emissions, or those that derive from areas outside of an entity’s control, such as emissions across supply chains or from use of a company’s products. While these emissions typically account for the most of a company’s footprint, less than a third of corporate net zero targets cover the entirety of Scope 3 emissions, and 25% partially cover them.
Prof. Angel Hsu, Director of the Data-Driven EnviroLab, said:
“Given Scope 3 reporting is hard and it’s currently voluntary, most firms take an ‘à la carte’ approach to carbon reporting and action – choosing the lowest hanging fruit and ignoring potentially the largest emissions sources in their value chain.
“To realise net-zero, firms must urgently shift to the ‘set menu’ – tracking and tackling Scope 3 emissions, where the broadest opportunities for greenhouse gas emission reductions lie.”
Other areas for improvement highlighted by the report includes accountability, with the study finding that only 18% of company emissions targets are tied to corporate leader accountability. This measure drops to only 2% at the national level for country target accountability.
Disclosure was one of the stronger areas examined by the report, with findings indicating that 75% of public company net zero targets and 60% of country targets include net zero reporting mechanisms.
Dr Takeshi Kuramochi, Senior Climate Policy Researcher at NewClimate Institute, said:
“Following COP26, net zero is almost universal. Now, both governments and corporates must shift targets to a stronger footing, to operationalise net zero and drive rapid short-term emissions cuts.
“The message is getting through, but we have a long way to go. If governments, or corporates have set out a fully-fledged plan, they must quickly clarify how they will reach their targets. It is problematic that only a small fraction of government and corporate leaders are currently held accountable for their emission reduction actions.”