EcoAct: Dow 30 Net-zero Commitments Rise but Carbon Reductions Are Inadequate to Meet 1.5°C Threshold
The largest US Corporations demonstrate commitment to achieving net-zero ambitions but struggle to turn ambition into climate-oriented business strategy and substantive emissions reduction
New York, NY, October 24, 2022 – EcoAct, an Atos company, has today released its 12th Annual Corporate Climate Reporting Performance Report analyzing the world’s largest listed companies’ activities in tackling climate-related sustainability challenges and disclosing their progress. The 2022 report reveals that corporations are more engaged than ever on the topic of climate and their commitment toward net-zero is rising, but an inability to turn this into business strategy, climate action, and emissions reductions is hampering progress in limiting temperature rise to 1.5°C. This year’s expanded study compares the progress of 119 companies in 27 different sectors across the major international indices, in four thematic categories: Emissions measurement and Reporting; Ambition and Emissions reduction targets; Strategy, Governance and Action plan; and Achievements.
The US is showing stronger climate commitments in 2022, as the largest businesses in the DOW lead all indices in companies setting net-zero targets before 2040, in companies setting a 1.5°C-aligned, validated science-based near-term Scope 1 and 2 targets, and in commitments to offset residual emissions via carbon removal. The US also took the lead in some reporting categories, beating the 16% international average with 25% of DOW largest companies scoring an A in CDP, and well eclipsing the 13% global average with 30% reporting all relevant Scope 3 emissions categories.
Cisco distinguished itself in this year’s rankings, leaping 12 spots to number one in the DOW index and number four overall with its ambitious SBTi-verified net-zero target. Microsoft, Nike, and Apple trail Cisco at the top of the list while United Health (+16), Disney (+8), and McDonalds (+8) made the biggest advances in the rankings since last year.
Commenting on the findings, William Theisen CEO of EcoAct North America said: “I am encouraged by the actions and ambition companies in the US have taken to help us stay within a 1.5° trajectory. Our findings highlighted how DOW largest companies are surprisingly strong in both short-term ambition and target setting considering the absence of the legislative drivers seen in Europe. However, there is still a lack of adequate long-term ambitious target setting and assessing climate risk in public disclosures that is needed. Close to a fourth (22%) of large, listed companies internationally do not publicly view climate change as a principal risk to their organizations. Given disclosure requirements in the US are becoming more and more apparent, for example the pending SEC ruling, we hope to see more companies and leading corporations prioritizing their disclosures on risk ahead of legislative action to help transform their businesses and the planet.”
The report found that the world is demonstrating ambition and commitment to reporting and reducing emissions, but failing to deliver the real emissions reductions required to limit temperature rise to 1.5°C. Seventy percent of large corporations are committed to net-zero, but the progress is negligible when considering that the company commitments are not always science-aligned, and most are short-term strategies. Even companies’ most ambitious net-zero reduction targets fall short of the 90% reduction required for the new Science Based Targets Initiative (SBTi)’s Corporate Net-Zero Standard’s framework for science aligned targeting.
The US trails the world in a few categories, such as the use of renewable energy sources and in following disclosure and reporting recommendations from the Task Force on Climate-related Financial Disclosures (TCFD). The largest companies around the world are not demonstrating leadership on climate risk management. Thirty-four per cent of the world’s corporations demonstrated the highest level of best practice risk reporting, while a meager 15% of DOW largest companies met the standards. DOW largest companies also scored the lowest of all indices in the implementation of an internal price on carbon to incentivize emissions reduction.
At the international level, the corporations topping the rankings include Telefónica, Sanofi, E.ON, Cisco, and GSK. Although corporations have improved in target setting, the heightened science-based standard has proven challenging to reach. Just over a third (35%) of large companies have a 1.5oC aligned validated science-based target (SBT) for Scope 1 and 2 emissions and just 8% have one for the critical Scope 3 emissions that come from their supply chains. Further, the majority of large-listed companies have not demonstrated adequate emissions reductions over the course of last year as the economy recovered from COVID-19, and some increased emissions.
Stuart Lemmon CEO of EcoAct and Managing Director of the Net Zero Transformation practice at Atos said: “I am encouraged to see that over 70% of large companies now have some commitment to net-zero in place. Still, large corporations have a huge performance gap to close in order to meet the scientific advice on decarbonization. The findings over the last two years revealed that the world’s most prominent corporations committed to net-zero have yet to fully understand the scale and pace of change required to deliver the target for their organizations."
The past few years of the study confirm the vast potential which large corporations have to move the needle on reducing carbon emissions while also demonstrating the possibility for gaining competitive advantage through action on sustainability. The study this year also examines the 20 largest listed companies by market capitalization in the following indices: CAC, DAX, DOW, FTSE, FTSE MIB and IBEX.
To learn more about EcoAct and its solutions to help effectively tackle the challenges of climate change, visit www.eco-act.com. Download the full 12th Annual Corporate Climate Reporting Performance Report here.
About EcoAct, an Atos company
EcoAct, an Atos company, is an international climate consultancy and project developer that supports companies to set robust science-aligned net-zero strategies and achieve their climate targets. Founded in France in 2006, the company now spans three continents with offices in Paris, London, Barcelona, New York, Montréal, Munich, Milan and Kenya.
With a team of more than 300 international climate experts, EcoAct’s core purpose is to lead the way in delivering sustainable business solutions that deliver true value for both climate and client. EcoAct is a CDP Gold Partner, a founding member of ICROA, a strategic partner in the implementation of the Gold Standard for the Global Goals and reports to the UN Global Compact.
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