The last twelve or so months have seen a flurry of corporate commitments and a huge ramp-up in ambition to reduce carbon emissions. It has been estimated that almost one quarter of global CO2 emissions and more than half of global GDP were covered by Net Zero commitments by June 2020(1). However, the gap between ambition and reality can often be very significant, for example, due to a lack of standards(2).
Global warming and the role of GHG emissions is a well-established fact(3). In response, carbon reduction efforts in the private sector have been made for decades. Such carbon reductions were reported, for example, as part of energy efficiency programmes (4). The goalposts have shifted in recent years due to the urgency of the climate crisis. Global warming has gained worldwide attention not least due to the Paris Agreement in 2015. Countries are now strengthening their commitments through setting Net Zero targets. Six countries have enshrined Net Zero reduction in law, five countries and the EU have proposed legislation, fourteen countries have targets in policy documents, while many more are discussing Net Zero targets (5).
In the private sector, carbon reduction has since become a strategic objective for many businesses and has evolved well beyond the isolated environmental targets of the past. Today, carbon reduction is a priority for many companies and their stakeholders - including shareholders and creditors. Yet, the voluntary nature of most efforts means that targets can be set through arbitrary parameters. What is needed to solve the climate crisis are commitments to reduce GHG emissions that are aligned with scientific global warming scenarios. A study of companies with science-based targets shows that these companies reduce emissions at far greater rates relative to emissions trends in the wider global economy (6).
1 These estimates include targets set by cities, regions, universities, investors and companies under the ‘Race to Zero Campaign’. See UN Framework Convention on Climate Change (2020). click here
2 Financial Times (2020). The problem with zero carbon pledges.
3 William D. Nordhaus (1976). Economic Growth and Climate: The Carbon Dioxide Problem. Yale University.
4 See, for instance, Unilever’s ‘Environmental Performance 2000’ report which shows CO2 reductions from 1995 due to energy saving measures.
5 See Energy & Climate Intelligence Unit for a detailed breakdown of country Net Zero commitments: click here
6 See SBTi (2021). From Ambition to Impact: Science Based Targets Initiative Annual Progress Report 2020.
Disclaimer
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