A growing spread of net zero commitments that includes 67% of fossil fuel groups represents progress in the pursuit of globally agreed climate objectives, but swathes of public and private entities – including more than 1,000 of the world's largest listed companies – have no targets in place, according to the Stocktake report released by the Net Zero Tracker research group today (Monday).

In its third review of progress toward globally agreed climate change objectives the group of mainly UK-based researchers comprising NZT found that on the upside, setting net zero targets for greenhouse gas emissions has become a “corporate norm” covering 65% of the world’s largest companies defined in terms of annual revenue.

The report found that national net zero targets potentially cover at least 88% of the greenhouse gas currently emitted globally, up from 61% in December 2020, when the first Stocktake was published.

“The NZT Stocktake shows that in the last 2.5 years (since the first report) a clear consensus to curtail GHG emissions to net zero has been reached, with the bulk of national governments setting commitments," NZT stated in its summary.

The Stocktake also showed an increase in the number of national governments taking steps to formalise national net zero commitments into domestic policy, with 72 targets — including those of the US, UK, Nigeria and Japan — either enshrined in legislation or outlined as a goal in policy documents.

"The proportion of net zero targets set in domestic legislation or policy documents has substantially increased from 5% of total greenhouse gas coverage in December 2020 to 75% today," the report noted.

Of more than 4,000 entities of all types currently tracked by NZT, at least 1,475 were found to have a net zero target, up from 769 in December 2020, and 1,180 twelve months ago.

The list included 149 countries, up from 124 in December 2020, 145 states and regions, up from 73, as well as 252 cities, up from 115, and 929 publicly-listed companies from the Forbes Global 2000, up from 417

On the other hand, NZT’s Stocktake found that 49 members of the United Nations Framework Convention on Climate Change (UNFCCC), plus 558 regional provinces or states, 934 major cities, and 1,057 of the largest publicly-listed companies still lack any net zero target, and many of those lack any kind of mitigation goal.

Fossil fuel fudge?

In its report, NTZ acknowledged the sharp increase in the number of the world’s largest 112 fossil fuel companies with net zero targets increased — 75 compared to 51 in June 2022 — but criticised the failure to fully cover or clarify coverage of Scope 3 emissions and an absence of commitments to make the transition away from fossil fuel production, despite UN guidelines stating that credible net zero targets require "specific targets" aimed at ending the use of fossil fuels and support for their production.

"To further align with the UN Expert Group’s recommendations, the Tracker is preparing to introduce a new indicator that assesses whether entities intend to phase out fossil fuels. For this report, we piloted the indicator against the 114 fossil fuel companies we track. We found that none of these companies is making the necessary commitments to fully transition away from fossil fuel extraction or production," the report stated.

The Stocktake suggested that inaction is leaving those targets "misaligned" with scientific and policy consensus, as reflected in the recommendations of the UN Secretary-General’s Expert Group on Net-Zero, issued last year, and described this as one of the key political issues in the lead-up to the COP28 event scheduled to take place in the United Arab Emirates in November.

The report also found that a rising number of companies (26%) plan to use carbon dioxide removal within their value chains.

“Even in a fossil-free world we will need clean energy for all and companies sequestering residual carbon," stated Dr Steve Smith, executive director of Oxford Net Zero, one of the largely UK-based research groups of which the NZT is comprised.

But he added: People in fossil fuel companies have the skills to build the future. By falling prey to the status quo, companies are either delaying the net zero transition, or maybe worse from their perspective, lagging behind on the industries of tomorrow and increasingly today,”

Deeper transition needed

A shortfall in targets and action was also identified among subnational entities, both at the global level, but also within the G7 group of largest developed economies.

“The quantity of cities, states and regions committing to net zero is increasing, but only at a gradual rate,” NZT commented on the report. “Only 252 large cities have set net zero targets, which together represents 37% of the 2.1 billion people living in large cities.

Globally, 41% of states and regions were found to have no mitigation targets, compared with the vast majority of states and regions in the G7 group of larger developed nations (80%), the EU (75%) and the US (72%) that do.

At the city level, 72% of EU cities were found to have pledged net zero, compared with 60% in the US and 37% across the whole world. Half were found to have no mitigation target of any kind in place.

US lagging

About a quarter of the tracked companies are headquartered in G7 countries and at least 57% of these were found to have net zero targets in place.

The Stocktake reported progress overall in the corporate category, with net zero targets in place at almost half the world’s largest listing companies.

“Target setting momentum at the company level steadily continues, with company coverage of net zero targets having more than doubled in a little over two years by number, an increase in momentum that has not been matched by other entity groups,” the report stated.

In the corporate sector, US companies were found to trail their EU counterparts, with 49% of companies tied to net zero targets, compared with 79% in the EU.

NZT found that only 4% of corporate net zero commitments met revised ‘Starting Line criteria’, set out in June 2022 by a UN Race to Zero campaign which called for specific targets. These included coverage of all greenhouse gases and emission scopes, clear conditions set for the use of offsets, published plans, rapid implementation measures and annual progress reporting on both interim and longer term targets.

The Stocktake found that only 37% of corporate net zero extended to full coverage scope 3 emissions, including end-use by consumers, and that just 13% of corporate net zero targets currently specify qualitative conditions under which carbon offsets would be used.

Professor Thomas Hale, of the Blavatnik School of Government at University of Oxford said: “Though the vast majority of countries have now set a net zero target, the lack of similar targets in parts of the private sector and in local and regional governments hamstrings nations’ ability to deliver on those goals. Implementation requires all hands on deck. By incentivising and supporting companies and sub-national governments to set rigorous net zero targets and plans, countries can boost the credibility of national climate goals.”

It's about delivery

NZT said its first two reports, Taking Stock 2021 and Net Zero Stocktake 2022, were intended to provide reference points against which to judge progress over time in both net zero target-setting (intent) and in adoption of measures of robustness (integrity).

These included, for example, monitoring of whether entities are restricting the use of offset credits to meet their targets, whether they are setting near-term interim targets for immediate action on emission cuts, and whether they commit to annual reporting.

"If Phase One of net zero was about accepting the scientific principle of net zero and Phase Two about pledges aiming to get there, the much more consequential Phase Three is about delivery," the report stated.

"Stopping climate change at safe levels is a timed test to halve emissions in the next decade, achieve net zero carbon dioxide (CO2) in the next 25 years, and go to net zero greenhouse gas (GHG) emissions thereafter. Entities that have set long-term targets but are doing nothing concrete to meet them are coming under more scrutiny than ever."

Nowhere to hide

In its new report, NZT said the 4000 entities in its database are now discovering that there “is nowhere to hide” when it comes to the credibility of their indicators.

“We find that entities are not, overall, implementing measures of integrity as quickly as might be expected. More than 1000 set their net zero targets over a year ago, and have therefore had time to prepare robust strategies for reducing emissions. Leaning on the Race to Zero’s latest version of its ‘starting line’ criteria — a minimum threshold that is necessary but by no means sufficient — we found that fewer than 5% of net zero targets set by sub-national governments and companies met this procedural bar,” the report stated.

Looking ahead to the COP28 summit scheduled to take place in Abu Dhabi later this year, NZT said analysis of collective progress towards the goals of the Paris Agreement goals raised the key concerns that a great many global entities have still not set a net zero target consistent with what 195 nations signed up to eight years ago and warned that most entities that have pledged net zero “do not meet minimum requirements for what good net zero looks like, including backing up a long-term vision with urgent near-term efforts to halve emissions”.

It concluded: “The age of implementation is here, but net zero integrity has been slow to catch up. In the year of the UN Global Stocktake, the big question is whether existing net zero targets will acquire the measures of credibility quickly enough to keep the Paris Agreement’s temperature goals within reach. We need more entities to sign up, and need those that have pledged to step up.”