Good climate intentions abound in 2023 — but even the noblest corporate ideals demand rigorous planning to come to fruition. Leading companies across every sector are prioritizing decarbonization, with many declaring meaningful emissions reduction targets. Yet a sizable gap lies between aspiration and action. In this article, we distill nine megatrends permeating a fast-evolving landscape.
More companies than ever are voluntarily reporting their GHG emissions. In 2022, many organizations made substantive increases in sustainability reporting, with 96% of S&P 500s and 81% of Russell 1000 companies now publishing their own reports.
More companies than ever are setting net-zero targets. More than one-third of the world’s largest publicly traded companies have net-zero targets — a significant uptick from one-fifth in December 2020.
There remains a wide gap between ambition and action. The October 2022 Net-Zero Company Benchmark Assessment from Climate Action 100+ — an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change — found that while many companies are indeed making incremental climate improvements, their real-world actions aren’t yet sufficient to meet stated net-zero goals.
Net-zero approaches are shifting emphasis to eliminating emissions altogether. Corporate sustainability leaders are increasingly putting less emphasis on purchasing carbon offsets, and more on absolute upfront emissions reductions, such as replacing fossil-fuel-sourced power with renewables.
Net-zero targets are becoming more stringent. ‘Net zero by 2050’ claims may be nebulous at best — or characterized as greenwashing at worst by skeptics. Clear, science-based net-zero targets that support 1.5°C Paris alignment represent the concrete steps needed to define and reach net-zero status, without sacrificing public and stakeholder trust that your company is able to walk the walk.
The Net-Zero Standard from the Science Based Targets Initiative (SBTi) focuses on companies making rapid, deep emissions cuts; setting near and long-term targets; understanding that net-zero claims are only valid once those long-term targets have been achieved; and investing beyond their own value chain to support climate mitigation elsewhere.
Net-zero strategies are expanding to Scope 3 and beyond. Where previous focus has been on reducing Scopes 1 and 2 emissions (i.e., those owned or controlled by the company itself), more companies are setting their sights now on Scope 3 emissions, the indirect emissions that take place outside their own operations. By measuring value and supply chain emissions, companies can reduce their own carbon footprint by working with suppliers to reduce theirs.
Climate-related financial disclosures are coming. Regulatory disclosure is poised to become mandatory in major economies around the world, from the UK to Switzerland to Brazil. As a prime example, companies in the EU will soon be required to disclose their environmental impacts. And although it’s still in limbo, the U.S. SEC’s proposed climate-related disclosure rule would also require public companies to provide investors with climate-related risks.
Corporate net-zero claims are under increased scrutiny amid a renewed era of greenwashing skepticism. In fact, a UN expert group recently laid out recommendations “to prevent net zero from being undermined by false claims, ambiguity and ‘greenwash.’” Their suggestions include making commitments public, including interim, science-based targets, and measuring absolute emissions versus emissions intensity.
Net-zero is now required business as usual, not the sole purview of progressive Fortune 100s. Sustainability goals have become table stakes. Today’s corporate leaders can’t afford not to have a thoughtful net-zero strategy, paired with effective implementation.
Are you ready to pursue a net-zero strategy in your corporate facilities?
Connect with a Mantis Innovation expert today to discuss how together, we can reduce or eliminate greenhouse gas emissions with the mix of efficiency, renewables, and offsets that best supports your business goals.
Mr. Bendewald is currently Vice President at Mantis Innovation, where he uses his breadth of experience in the energy sector to lead the strategic planning and delivery of services to help corporations meet their net zero goals.