Businesses across all sectors of the global economy play a crucial role in reducing their environmental impact and accelerating the path to net zero.
As pressure on companies to act on climate change rises, more and more companies are setting ambitious emissions reduction targets, supported by the Science Based Targets initiative (SBTi).
According to its 2021 Progress Report ‘Scaling Urgent Corporate Climate Action Worldwide’, the results revealed that 2,253 companies, covering over a third of global economy market capitalization, had approved emissions reductions targets or commitments with the initiative. Specifically, 2021 was a record year as the number of SBTi companies increased three times faster than in 2020. These companies equal to $38 trillion USD of global market capitalization, having 1,082 approved targets. Also, more than two thirds of them are aligned with 1.5°C, while 63% of these with a 1.5°C-classified target are willing to cut emissions at a higher rate than is required.
Although setting net-zero science-based targets aligned with 1.5°C is crucial for a company’s climate action journey, it is not enough. Concrete plans are needed, reporting on progress with due transparency. Some of the world’s largest companies are being accused of exaggerating their climate actions, as NewClimate Institute and Carbon Market Watch joint report showed earlier this year.
The analysis provides insights for 25 major companies on the transparency and integrity of their headline climate pledges. Among them, Amazon, Google and Volkswagen have low integrity on their net-zero targets, while Unilever, Nestle and BMW Group were found to have very low integrity. Moreover, these companies are on track to cut their emissions by only 23% on average by 2030.
The pressure on companies to act on climate change has risen, thus their claims often lack real substance. However, companies identified as climate leaders exist, with Maersk and Deutsche Post being two of them, making major investments in decarbonization technologies for transport and logistics.
SMEs are also stepping up the fight against climate change, but they still lack the resources needed. Taking climate action leads to more resilient businesses and being aware of the benefits, they are starting to prioritize climate action. Financial resources is the biggest challenge and a barrier to them as it is estimated that 70% of SMEs worldwide need access to external funds to reduce their emissions and go net-zero faster.
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