To achieve the Paris Agreement’s 1.5°C warming limit, global greenhouse gas emissions must attain their peak before 2025, decrease by 43% by 2030, and reach net zero by 2050. Business has a critical role to play in achieving these ambitious targets. Accenture has tracked 2,000 of the world’s largest public and private companies by revenue (G2000) to examine both their net zero commitments and their records of reducing their operational greenhouse gas emissions over the past decade. Accenture’s latest analysis shows that the share of these companies setting targets continues to grow, 37% of them are now committed to achieving net zero emissions while 33% are cutting emissions but not fast enough, and only 18% are on track to reach net zero by 2050.
Almost two-fifths (37%) of the G2000 are now fully committed to net zero, up three percentage points since 2022. Compared with 2022, the share of European companies in the G2000 with net zero targets is up 10 percentage points. By contrast, progress among North American companies has stalled. There may be many reasons for this, including both political and regulatory developments in the region whereas the share of European companies in the G2000 with net zero targets is now more than double that of their North American counterparts. The rest of the world, meanwhile, has crossed the 30% markup from 28% in 2022, indicating that net zero is increasing on the agenda for companies headquartered across the globe.
Although the general trend points to progress, there is much diversity across industries. On average, companies in many industries, including various carbon-intensive ones such as Utilities, have been cutting emissions since 2016. However, some of the firm is still going in the wrong direction. The past decade saw immense advances in digital technology and with that the rapid growing of technology firms. Software and platform firms have seen their operational emissions grow by 15% annually since 2016. At this rate, a company’s carbon footprint doubles every five years.
Adopting decarbonization levers concept has clear benefits. The typical company that adopted the lever tended to cut emissions, whereas the typical non-adopter still increased them. The data from Accenture show that “stacking” levers tend to work better. While it’s not the case that deploying one more lever will guarantee a faster rate of emissions reduction, the evidence shows in the data. Companies that adopt fewer than 10 levers typically still grow emissions, but those that adopt 10 or more are much more likely to be decarbonizing. The evidence, therefore, seems to confirm that setting near- and long-term targets, and boldly adopting multiple levers, accelerates companies’ decarbonization.
Net zero is unlikely to be achieved if it isn’t targeted. It is suggested that companies make more progress when they commit to hitting net zero. The typical company with a net zero target has cut emissions since 2016. The typical company without a target has not. Companies should then make sure they set milestones along the way, in the form of publicly announced near term targets that are independently scrutinized by third parties such as Science-Based Targets initiative (SBTi).
TAKE-HOME MESSAGE
Every company is at a different place along its journey to net zero. But whether they are right at the start, making good progress or well along the way, the roadmap is similar. The route starts with setting targets, moves through implementing more well-established measures, and then progresses by working on the more complex decarbonization levers.
Article by: Asst. Prof. Suwan Juntiwasarakij, Ph.D., Senior Editor & MEGA Tech