21st September 2021
Reality Check
The third annual study to assess how Fortune Global 500 companies have increased their climate actions and commitments.
Read on for a snapshot of the findings and trends, or download the full report.
Our research finds that increasingly the world’s largest companies are leaning in to the collective requirement to tackle climate change, with 38% having a significant milestone set for 2030, up eight percentage points from last year.
There has been a three-fold increase in net zero targets (albeit from a low base and mostly with distant achievement dates), 50% increase in the number of companies that have either achieved carbon neutrality or are targeting it by 2030, and a 25% increase in Science-Based Targets
By breaking out net zero and carbon neutral commitments, we can see that many companies are using the two approaches in tandem. The vast majority (86%) of companies with a net zero target have set them after 2030. One third of those companies with a net zero target are either carbon neutral already or have a more immediate carbon neutrality target.
Looking at net zero targets, we consider 20% not to be fully aligned with the emerging consensus around how net zero is defined and would consider these as closer to carbon neutrality targets on the basis of not covering value chain emissions. We consider 56% of net zero targets as responsible net zero targets, with a target date in line with the government target for net zero where they are headquartered, or the Paris Agreement if there is no national target. We consider 24% of net zero targets as leadership net zero targets, accelerating ahead of the national target for net zero where they are headquartered, or the Paris Agreement if there is no national target. This is an important distinction to make: net zero targets can’t be considered as corporate climate leadership if they are the law of the land.
While there has been an encouraging growth in actions and commitments, we must be mindful not to exaggerate the progress: Over 60% of companies are not committed to deliver a meaningful climate milestone by 2030.
But our research shows that there is a significant and growing group of the world’s largest companies for which progress and profit can live together and who believe you can be in the business of bettering the world.
Corporate climate action and 2030 commitments are up a quarter in a year
38% of companies in the Fortune Global 500 have delivered a significant climate milestone or are publicly committed to do so by 2030, up by eight percentage points from last year. This has mostly been driven by a 50% increase in the number of companies that have either achieved carbon neutrality or are targeting it by 2030, and by a 25% increase in Science-Based Targets (SBTs).
Figure 1: Date of Fortune Global 500 companies’ public commitment that they are, or will be by 2030: carbon neutral, meeting an RE100, SBT or net zero target.
Carbon neutrality, SBTs and net zero are often being used in combination by companies, but over different time horizons
Carbon neutrality (59%) leads the milestones achieved to date, SBTs (59%) lead the milestones set to be achieved before the end of this decade, and net zero (55%) lead the milestones beyond 2030.
Figure 2: Milestones achieved to date, milestones set to be achieved by 2030 and milestones beyond 2030: carbon neutral, RE100, SBT or net zero targets
Net zero has arrived as a major pillar of corporate climate action, but confusion over definitions means it is not quite that simple
The number of companies with a net zero target has trebled in a year: up to 25% of companies from 6% of companies a year ago.
86% of these net zero targets are set for further out than 2030. 52% of these companies with a net zero target have set a Science-Based Target, and one third of companies with a net zero target have a more immediate carbon neutral target/achievement.
We consider 20% of net zero targets to be not fully aligned with the emerging consensus around how net zero is defined, and would consider these as closer to carbon neutrality targets on the basis of not covering value chain emissions. We consider 56% of net zero targets as responsible net zero targets, with a target date in line with the government target for net zero where they are headquartered, or the Paris Agreement if there is no national target. We consider 24% of net zero targets as leadership net zero targets, accelerating ahead of the national target for net zero where they are headquartered, or the Paris Agreement if there is no national target.
Figure 3: net zero targets broken down into what we consider carbon neutrality targets, responsible net zero targets, and leadership net zero targets.
We asked some of our Fortune Global 500 clients for their reaction to the research
To read more findings, understand our methodology or access the full data set, please download the full report.
Contact us to find out how we can help you deliver your climate change goals.