The findings of the Intergovernmental Panel on Climate Change (IPCC) are clear: to avoid the most catastrophic effects of climate change, global temperature rise must be limited to 1.5°C or below. To reach this goal, greenhouse gas (GHG) emissions must be reduced 50% by 2030 and to net zero by 2050. Companies have an essential role to play in the transition to a net zero emissions economy. By acting ambitiously and proactively, they can minimize material financial, regulatory, physical, and systemic risks posed by climate change. At the same time, they can seize economic opportunities to gain competitive advantages, drive business innovation, and create long-term value during the shift to a sustainable, clean energy economy.
Recognizing these risks and opportunities, in 2022 more than a third of the world’s 2,000 largest companies have goals to reach net zero emissions by 2050 or sooner. However, according to Net Zero Tracker’s analysis, 65% of those with net zero goals showed “a troubling lack of clarity on essentials” including which GHGs and scopes were covered and how companies planned to meet their goals. Meanwhile, the Science Based Target initiative’s (SBTi) most recent progress report shows exponential growth in companies setting targets in the last year, yet only 46% of companies are reporting progress on those targets.
This raises a key point: while it is important that companies make long-term commitments to science-based targets that reduce emissions in line with limiting global temperature rise to 1.5°C, companies must create and implement near-term action plans to put them on a credible path to achieving long-term goals.