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On Earth Day, Net Zero Tracker (NZT) has released its latest analysis that reveals how far private firms are lagging behind their public counterparts in setting climate targets and, as a result, their readiness for incoming climate regulation.
As its name suggests, NZT tracks the net zero commitments made by nations, states and regions, cities and major publicly-listed companies, and shows these results in a ‘living’ database. By doing this it aims to increase the transparency and accountability of the net zero targets pledged.
In its latest analysis, NZT shows a widening gap between the climate targets of private v publicly-listed companies. Less than two-fifths of the world’s largest 100 private firms (38) have net zero targets, compared with the majority (70) of their publicly-owned peers.
Digging further into the analysis shows how the gap widens further, and the effect this could have on private firms. For instance, only half of the world’s 100 largest private firms have set a net zero or emissions reduction target, compared with the vast majority (82) of the largest publicly-owned firms.
As NZT stated, this lack of any targets also leaves these firms unprepared for incoming climate regulations, such as the forthcoming EU Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).
Apart from the EU, other areas of the world are also seeing increasing climate regulation coming into force. For example, California’s Climate Corporate Data Accountability Act will require many large companies operating in the world’s fifth-largest economy to report both emissions and climate-related financial risks.
According to NZT, these firms’ reluctance to set targets hamstrings the ability of countries to deliver ‘whole-economy decarbonisation’ to meet national net zero goals.
Camilla Hyslop, data lead at NZT, said: “The alarming reality is that half of the largest 100 private companies, whose revenues make them ‘too big to fail’, have opted out of setting any climate targets. This leaves both their home countries and global supply chains exposed to serious transition risk.”
Among the high-emitting sectors (fossil fuels, infrastructure, manufacturing and materials), the analysis found that publicly-listed companies are more than twice as likely (74%) to have net zero commitments, compared with private firms (34%).
None of the eight private fossil fuel companies investigated has pledged a net zero target, compared with 76% of public companies in this sector. The largest high-emitting private companies without a net zero target are Trafigura Group (Singapore), Koch Industries (US), Amer International Group (China) and Pacific Construction Group (China).
According to NZT, the total lack of net zero targets set by private fossil fuel companies runs counter to the global commitment delivered at COP28 to transition away from fossil fuels.
Catherine McKenna, chair of the UN Secretary-General’s High-Level Expert Group on Net-Zero Commitments, said: “The policy is unequivocal: three-quarters of national-level net zero targets are already enshrined in law or policy. The economics is exponential: $1.7tn was invested in clean energy in 2023, 65% more than into fossil fuels.”
“The defining race of these upcoming decades – shaping the net zero economy – will not be won through baby steps, but through bold and credible leadership."
The NZT analysis is launched at a time when some governments have admitted they are struggling to see how they will reach net zero targets. For instance, just last week the Scottish government said it will abandon its 2030 target for reducing emissions after advisers said it was “not achievable”, although plans to stick to a 2045 net zero goal will remain.
