21 October, 2022
There’s a virtuous green glow that comes from announcing ambitious climate targets. In a world where businesses are expected to be supporting – if not leading – the transition to a low carbon economy, the bigger and bolder your net zero claim, the better you look.
This race to outdo competitors in the climate ambition arena is no bad thing – bold targets have a real role to play in spurring action towards decarbonisation. Or they would do, if those setting targets were actually making plans to achieve them.
According to the latest report by Climate Action 100+ – a group of investors monitoring the 166 companies responsible for 80% of global corporate greenhouse gas emissions – the vast majority of companies with net zero targets have no strategy in place to achieve them. In fact, only 19% of companies have quantified key elements of their decarbonisation strategies, and only 10% have committed to align their capex plans with their GHG targets.
It’s hard to imagine how net zero will be achieved without a plan to get us there. And businesses aren’t the only ones guilty of acting first and thinking later. In the financial sector, there have been recent grumblings from members of the Glasgow Financial Alliance for Net Zero – a coalition of more than 400 financial institutions committed to net-zero portfolios by 2050 – as signatories grapple with the stringent policies that have been set out for the alliance. JPMorgan Chase and Bank of America are among those threatening to leave the alliance due to concerns about litigation should they fail to achieve the requirements. Two pension funds have already left.
This should be stating the obvious – but targets count for next to nothing unless businesses have a credible strategy for how they will achieve them. Consumers, media, and government all have a role to play in holding businesses to account for this, ensuring that those that fail to make progress are duly disciplined. And those thinking about net zero targets should take note – the world won’t stand for inaction on something as crucial as this.
By Louise Podmore