Global Private Firms Lag in Climate Commitments, Only 40% Setting Net Zero Targets

A recent report reveals a significant lag in climate commitments among the world’s largest private companies, with only 40 of the top 100 firms setting net-zero carbon emissions targets. This stark contrast with their publicly listed counterparts, 70 of whom have made similar commitments, underscores the challenges in aligning global corporate practices with the climate goals of the 2015 Paris Agreement, which aims to limit global warming to 1.5 degrees Celsius.

According to the Net Zero Tracker report, the slower pace in private firms adopting climate goals is attributed to less market and reputational pressure, and a relative lack of regulatory frameworks compared to publicly traded companies. John Lange of Net Zero Tracker highlighted that changes are emerging across these areas, indicating a potential shift in corporate climate action.

The analysis covered 200 of the world’s largest companies, showing that among the private firms with climate targets, only eight have disclosed detailed plans on achieving these goals. This lack of transparency and actionable plans led the report to criticize some of these pledges as mere “PR stunts.”

Interestingly, only two companies, Ikea and Bechtel, have committed to achieving their net-zero targets without relying on controversial carbon credits, which are often criticized for enabling ongoing pollution under the guise of offsetting.

The report also noted a concerning absence of net-zero targets among the fossil fuel companies surveyed, a sector where none of the private firms have set such goals, compared to 76% of the largest public firms in the same industry.

With new regulations on the horizon, such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) in the European Union, there is an increasing pressure on companies to comply. These EU regulations will require large companies to report their climate impacts and take active measures to reduce emissions, affecting not only firms based in the EU but also those with operations within it.

Experts believe that the implementation of these regulations will have a significant trickle-down effect, setting a precedent that could influence broader industry practices and lead to substantial environmental benefits. As regulatory landscapes tighten globally, private firms may find it increasingly necessary to adapt and align their operations with international climate objectives.