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If not now, when?

How are companies stepping up with the urgency required to deliver climate impact

Our fourth annual study, with research from Imperial College Business School, into how Fortune Global 500 companies have increased their climate actions and commitments is here.

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Despite growing uncertainty around climate claims, worsening macroeconomic conditions, and rising geopolitical tensions, the past year has seen a further increase in the number of companies making climate commitments.

42% of companies in the Fortune Global 500 have now delivered a significant climate milestone or are publicly committed to do so by 2030, up 11% from last year. In 2019 it was 23%, in 2020 it was 30% and in 2021 it was 38%.

Figure 1: When Fortune Global 500 companies have made a public commitment that they are, or will be by 2030: carbon neutral, meeting an RE100, SBT or net zero target

But much of the growth has been driven by targets set to land well beyond 2030, past the critical decade to align with the goals of the Paris Agreement and limit warming to 1.5 degrees Celsius.

The number of companies that have set a target for mid-century has gone up by 22% in the last year to 63%.

Figure 2: When Fortune Global 500 companies have made a public commitment that they are, or will be by 2050: carbon neutral, meeting an RE100, SBT or net zero target.

Much of the overall growth in commitments has been driven by an increase in net zero targets and Science-Based Targets (SBTs).

In the last twelve months, the number of Fortune Global 500 companies with a net zero target rose from 25% to 38%, a 52% increase.

The number of companies with a Science-Based Target rose from 27% to 34%, a 26% increase.

Despite concerns of greenwashing, having a carbon neutral or net zero target continues to be strongly correlated with the setting of science informed targets for internal emission reductions.

Companies taking responsibility for residual emissions today - or in the near future - through high-quality carbon credits are more likely to have a Science-Based Target (SBT), and even more likely to have a 1.5°C-aligned SBT, than those companies that do not.

Figure 3: Comparison between SBT commitments among Fortune 500 Global companies with and without carbon neutral and net zero targets

The scope and dates of net zero targets varies widely which will lead to confusion.

The number of net zero targets is up more than 50% in the last year, up to 38% from 27% last year, but more companies are excluding Scope 3 emissions from their targets and fewer companies are accelerating ahead of government legislation in their commitments.

Looking at sectors, there are large variations in target dates, with harder-to-abate sectors continuing to favor long-term horizons.

In the last year, the number of commitments set for 2030 or before has grown across all sectors. But in sectors that see harder routes to net-zero, longer-term targets still outweigh those set for this decade.

Figure 5: Climate actions and commitments of Fortune Global 500 companies by sector, as a percentage of companies in that sector, for 2030 and 2050

There are large discrepancies amongst sectors in the scopes of emissions covered in their net zero targets.

Net zero targets are not limited to companies in lower-emitting sectors, but those that cover value chain emissions tend to be concentrated in sectors with easier decarbonization pathways.

Figure 6: Sector average of carbon emissions per scope versus the percentage of companies with targets covering those emission scopes

Looking by region, companies headquartered in countries where there is a legally binding net zero target are more likely to have a climate commitment for this decade, or a net zero target by mid-century. On average:

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of Fortune Global 500 companies based in the Europe (including the UK) (101/129) have delivered a significant climate milestone or are publicly committed to do so by 2030, up by 7 percentage points from last year

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of companies based in the U.S. (66/125) have delivered a significant climate milestone or are publicly committed to do so by 2030, up by 6 percentage points from last year

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of companies based in China (6/127), where in 2020 the country committed to carbon neutrality by 2060, have delivered a significant climate milestone or are publicly committed to do so by 2030, up by 3 percentage points from last year

The question is no longer if companies should rise to the challenge of climate change, but how, and perhaps more crucially, when. Want to learn more?

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