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Towards net-zero
As corporate entities embrace their responsibility towards the environment, a growing number are charting ambitious courses towards net-zero. Target setting has boomed in popularity in recent years and businesses are very much looking at the tried and tested solutions to deliver on their ambitions.
Many businesses know that the net-zero transition remains a daunting and unquantifiable challenge. Focuses on decarbonisation in the short-term are essential while businesses wait for government support mechanisms and new markets for revolutionary green solutions to develop. But just how are corporates approaching the net-zero transition?
Let’s start with the good news. This summer, the SBTi confirmed a 100% increase in the number of companies setting targets aligned with climate science in 2023.
According to the SBTi, there was an 83% increase in the number of financial institutions and a 57% increase in corporates setting science-based targets in 2023 compared to 2022. The SBTi also recorded a “major growth” in the number of SMEs setting targets.
Increase in the number of financial institutions setting science-based targets in 2023.
Increase in the number of corporates setting science-based targets in 2023.
Increase in the total number of companies setting science-based targets in 2023.
A total of 449 corporates set targets that are in line with the SBTi’s Net-Zero Standard, requiring emissions to be reduced by at least 90% by 2050 at the latest. This represents a 245% increase on 2022 figures.
This is only one side of the coin when it comes to corporate climate targets, however. Many cases are emerging of businesses setting targets that are not aligned with science.
The 2024 edition of the Corporate Climate Responsibility Monitor, an annual assessment of climate plans from 51 multinational businesses, has revealed that the average large firm is planning for a 30% reduction in its absolute emissions footprint by 2030.
In contrast, the Intergovernmental Panel on Climate Change (IPCC) has recommended that a 43-50% reduction in global emissions, against a 2017 baseline, is aimed to give the best chance of reaching net-zero by mid-century along a 1.5C-aligned pathway.
This is largely the result of emissions targets being set on an intensity basis. Such targets leave wiggle room for companies to grow their overall emissions footprint. Another prevalent trend is the exclusion of Scope 3 (indirect) emissions from targets, despite the fact that such sources of emissions typically account for the majority of a large business’s overall emissions footprint.
Currently, there is an equal split between the number of survey respondents who have or haven’t formulated a climate strategy aligned with 1.5C.
Q. Has your organisation developed a 1.5°C-aligned climate transition plan?
We can expect the rollout of published Climate Transition Plans to continue at a pace over the coming months. Our survey shows that businesses are starting to turn to guidance to set and deliver such plans. The Transition Plan Taskforce (TPT) was initially introduced at COP26 in Glasgow in 2021, with an aim to implement new net-zero disclosure requirements for large businesses in high-emission sectors.
In April 2024, it published its ultimate set of resources, including its widely recognised disclosure framework for transition plans, launched last year, recommending how companies should develop plans and the key elements they should include.
edie’s survey found that 20% of businesses have already published a climate transition plan of some form, with another 53% “actively working on it”.
Businesses focusing on decarbonisation quick wins
According to PwC, between 65-95% of any one company’s carbon impacts are to be found within its supply chain. This is a big problem. Not only is the Scope 3 footprint large, but it is indirect and outside of the control of a company’s activities and operations. Tracking and reporting Scope 3 is tough enough; reducing supply chain emissions is even more difficult.
It is no surprise then that an increasing number of respondents say they are placing greater importance on addressing supply chain emissions as part of their decarbonisation activity. The issue is now ‘business-critical’ for 15% of businesses, compared with 16% that said the same in the previous edie Sustainable Business Tracker survey. Additionally, 33% of businesses view Scope 3 emissions as a “high priority”. Interestingly, 21% of businesses claimed that it was a low priority, while just 3% said it was not a priority at all.
Whereas Scope 3 has always been the highest decarbonisation priority for businesses in our previous Sustainability Tracker surveys, it is outranked by numerous focus points that many sustainability professionals would consider “quick wins”.
Almost half (43%) cited energy efficiency upgrades as a high priority. The next highest feature on the list was energy data management (43%) and then staff behaviour change (41%). Scope 3 does still top the list of measures when it comes to a business-critical priority, cited by 14%. Second and third on the list were zero-emission vehicles (14%) and energy efficiency upgrades (9%).
Q. How much of a priority is your organisation currently placing on each of the following areas of decarbonisation?
Q. How would you rank your organisation's current level of ambition when it comes to delivering sustainability and climate action - with 1 being not at all ambitious and 10 being extremely ambitious?
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