The COP27 climate summit this month has brought renewed attention to the confusion and lack of credibility prevalent in corporate Net Zero Pledges, with UN Secretary General, Antonio Guterres, calling for "zero tolerance for Net Zero greenwashing".
Earlier this year, the Secretary General appointed a High Level Expert Group to address the problems with net zero commitments of non-state entities. The group's report, launched at COP27 and titled 'Integrity Matters: Net Zero Commitments by businesses, financial institutes, cities and regions' lays out ten clear recommendations designed to ensure credible, accountable Net Zero commitments and to support a global equitable transition to a sustainable future.
Chair of the Expert Group, Catherine Mckenna stated Net Zero pledges must be "about cutting emissions, not corners" and that "right now, the planet cannot afford delays, excuses or more greenwashing".
The report stresses Net Zero commitments must be in line with the UN Intergovernmental Panel on Climate Change (IPCC) scenarios to limit warming to 1.5 degrees above pre industrial levels. This means global emissions must decline by at least 45% by 2030 and reach Net Zero by 2050. Commitments should include interim targets every five years starting in 2025 and must cover all greenhouse gas emissions and all their scopes.
With this in mind, it is clear that investors involved in financing the transition need to be able to easily sift through the greenwash and identify strong, credible Net Zero commitments that are serious about cutting emissions.
Rising to this challenge, as a research provider, we have developed criteria to analyse companies Net Zero commitments, breaking them down into their component parts, in order for clients to easily assess the strength and integrity of the commitment.
Our research identifies the following components of a company's Net Zero commitment:
- Commitment - has the company made a Net Zero commitment and what does this cover (e.g., Net Zero GHG, Net Zero Carbon or Carbon Neutral).
- Timeframe and Scope - what is the timeframe for the commitment (e.g., 2040 or 2050) and does it cover the entire value chain (e.g., Scopes 1, 2 and 3).
- Transition plan - has the company published a transition plan and how detailed is it (e.g., a Net Zero roadmap)
- Science-based interim targets - has the company set science-based interim targets and what timeframe and emission scopes are included in the target (targets are considered science-based if they are in line with the goals of the Paris Agreement - limiting warming to 1.5 degrees above pre-industrial levels).
- Residual emissions - does the company have a plan to deal with its residual emissions (e.g., carbon removal/offsetting. Residual emissions are those that are remaining after reasonable efforts have been made to reduce emissions as much as possible).
- Membership - what voluntary initiatives is the company participating in (e.g., Science Based Target initiative - Business Ambition for 1.5 degrees, RE 100)
Companies announce and publish their Net Zero commitments in many different ways which means it can often be confusing and hard to find – the language used can also be obfuscating and unclear. Our new research cuts through the confusion providing a clear description of the company commitment, in an easily digestible format, accompanied by narrative explanations.
In addition to this new Net Zero research offering, Ethical Screening offers Fossil Fuels-related criteria to give clients the ability to screen out different levels of involvement, and a full appraisal of company environmental information as part of our ESG ratings and analysis service.
Please click on the link below to register your interest and recieve the latest updates on our new Net Zero research and upcoming webinar.
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