The new Climate Impact Partners report offers some interesting data from companies in the Fortune Global 500 that underscore trends.
Nearly 70% of the planet’s 500 largest companies now have a public climate commitment, more than ever before.
Climate Impact Partners’ 6th annual report on the state of climate commitments from the Fortune Global 500 reviewed publicly available documents outlining these companies’ climate targets, and how they plan to meet them.
Net zero commitments jumped 6 percentage points since last year, with 45% of the world’s largest companies now publicly committing to be net zero by 2050. That is up from 39% in last year’s survey, and just 8% in 2020. While it’s encouraging to see more companies set their sights on a net zero future, the definition of the term may be splintering as fewer companies turn to the Science Based Targets initiative (SBTi) net zero framework.
Though this year’s report did not track progress toward targets, it’s promising that rather than sunsetting once-shiny pledges, climate commitments are becoming table stakes for this group of companies that collectively realize over $3 trillion in annual profit.
“What really surprised us in this data was the growth in targets, in a time frame when there’s economic uncertainty, significant ESG backlash, and political uncertainty … It sends a signal that they are more serious than not,” said Sheri Hickok, CEO of Climate Impact Partners. Here are four charts that underscore the trends:
Net zero targets are up, but not via SBTi
Change in net zero targets over the past five years
Source: Climate Impact Partners, Quiet Climate Action Report, September 2024.
Net zero commitments are up overall, but fewer companies are turning to the Science Based Targets initiative (SBTi) for their net zero framework. Last year, 18% of the Global 500 had, or were committed to setting, net zero targets under SBTi’s standard. This year, that number is down to 17%. The drop is due, in part, to SBTi’s removal of 239 companies from its dashboard earlier this year for missing the 24-month submission window for target validation.
The United Nations defines net zero as a state in which residual greenhouse gas emissions into the atmosphere are absorbed by greenhouse gas removals. The CIP survey did not look at how companies setting net zero targets outside of SBTi define the term. If this trend in net zero target setting continues, it could further splinter the definition of ‘net zero,’ making it difficult to compare targets and progress. The International Organization for Standards (ISO)’s planned release of a net zero standard next year could provide a more unifying definition of net zero.
42% of the Fortune Global 500 commit to using carbon credits
Stated usage of carbon credits among Fortune Global 500 companies
Source: Climate Impact Partners, Quiet Climate Action Report, September 2024.
Net zero commitments are up overall, but fewer companies are turning to the Science Based Targets initiative (SBTi) for their net zero framework. Last year, 18% of the Global 500 had, or were committed to setting, net zero targets under SBTi’s standard. This year, that number is down to 17%. The drop is due, in part, to SBTi’s removal of 239 companies from its dashboard earlier this year for missing the 24-month submission window for target validation.
The United Nations defines net zero as a state in which residual greenhouse gas emissions into the atmosphere are absorbed by greenhouse gas removals. The CIP survey did not look at how companies setting net zero targets outside of SBTi define the term. If this trend in net zero target setting continues, it could further splinter the definition of ‘net zero,’ making it difficult to compare targets and progress. The International Organization for Standards (ISO)’s planned release of a net zero standard next year could provide a more unifying definition of net zero.
Carbon neutral commitments remain mostly steady, but vary by geography
Carbon neutral actions and commitments among Fortune Global 500 companies
Source: Climate Impact Partners, Quiet Climate Action Report , September 2024.
Thirty-four percent of the Fortune Global 500 have a carbon neutral target, a dip of 1 percentage point from last year’s survey, but still up since 2022. The report did not examine how each company defines carbon neutral, nor what emission scopes these targets cover. Adoption of carbon neutral targets varies by region, with more companies headquartered in North America assuming these targets, while some companies based in Europe dropped their neutrality targets since last year.
Neutrality targets remain the most popular among Fortune Global 500 companies based in Asia. Nearly half of the Global 500 are headquartered in Asia; of these, more than 20% have neutrality targets. The dip in carbon neutrality targets among European-headquartered companies may be due in part to two complementary European Union directives defining use of these claims. The recently passed Empowering Comsumers directive prohibits ’carbon neutral’ and ‘climate neutral’ claims for products when based solely on carbon offsetting.
Next year’s anticipated Green Claims directive will likely clarify what information companies need to provide to support their corporate neutrality claims.
Ups and downs on Scope 3
On average
Source: Climate Impact Partners, Quiet Climate Action Report, September 2024.
Over the last five years, companies with verified SBTi net zero targets have reduced their Scope 3 emissions by an average of 6% per year, according to the CIP report. But on a company level, that progress fluctuates year to year. The report found that these companies’ Scope 3 emissions varied by an average of 13% each year, as a percentage of total company emissions.
That fluctuation could make it difficult for these companies to remain aligned with SBTi’s net zero framework. The Voluntary Carbon Market Integrity Initiative’s (VCMI) beta Scope 3 Flexibility claim aims to help solve this problem, providing more flexibility in how companies can meet near-term targets and remain on track for net zero.
This article originally appeared on Trellis Group (formerly GreenBiz.com as part of our partnership with the media and events company that accelerates the just transition to a clean economy.
Featured photo: Fortune500 ExxonMobil offshore oil rig.
