World's largest private firms fail to set climate targets: report

AFP || Shining BD

Published: 4/22/2024 6:43:50 AM

Only 40 of the world's 100 largest private firms have set net-zero carbon emissions targets to fight climate change, according to a report released Monday, lagging far behind public companies.

But for the world to meet the 2015 Paris Agreement to limit global warming 1.5 degree Celsius, all companies need to reduce their planet-heating emissions, the report by the group Net Zero Tracker noted.

The lack of market and reputational pressures on private firms compared to those publicly-listed, along with an absence of regulation are to blame for their slow uptake of climate commitments, John Lange of Net Zero Tracker told AFP.

"I think things are changing on all three of those fronts," he added.

The report compared 200 of the world's largest public and private companies based on their reported emissions reductions strategies and net-zero targets.

It found that only 40 of the 100 private firms assessed had net zero targets, compared to 70 of 100 publicly-listed companies.

Of the private companies that have set targets, just eight have published plans on how they will meet them.

"A pledge without a plan is not a pledge, it is a naked PR stunt," the report said.

- Regulations coming -

Only two firms -- furnishing giant Ikea and US engineering giant Bechtel -- ruled out using controversial carbon credits to achieve their net-zero goals, the report said.

Carbon credits allow businesses to offset their emissions by directing money toward a project that reduces or avoids emissions, such as protecting forests, but critics say they allow companies to keep polluting.

Meanwhile, none of the eight fossil fuel companies included in the report was found to have a net-zero target, compared with 76 percent of the sector's largest public firms.

There was also little improvement in the figures compared with a previous analysis done in 2022, "despite a massive uptick in regulation around the world", Lang said.

Several jurisdictions including the United Kingdom have adopted climate disclosure regulations.

Others have regulations on the horizon, with business hubs of California and Singapore requiring greenhouse gas emissions reporting from 2027.

The European Union also introduced two climate regulations -- the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) -- which will soon require thousands of large companies to report their climate impacts and emissions, and to take action to curtail them.

"We're trying to get private firms to understand what's coming for them," Lang said.

- 'Trickledown effect' -

The EU policies will have far-reaching effects in particular, targeting firms not only based in the bloc but those that may be headquartered elsewhere with branches or subsidiaries within the member states.

Yet two European private firms, including French hypermarket chain E. Leclerc, were singled out in the report for having set any emissions reduction targets.

E.Leclerc told AFP that the company has made efforts toward more sustainable practises like eliminating the use of single-use plastic bags, and is "committed to setting near-term company-wide emissions reduction targets".

But with the enforcement of EU regulations looming, firms will not be able to "dodge" climate targets much longer, Sybrig Smit of the NewClimate Institute told AFP.

"It's actually quite watertight. If companies want to do business in Europe, they are going to have to face the consequences," she said.

The firms analysed account for roughly 23 percent of the global economy, with the majority based in either China, the United States or EU states -- the biggest emitters of greenhouse gases, Lang said.

Any changes the firms make to meet new regulations will have substantial benefits for the environment.

"They have such a trickledown effect. Whenever such a big company is implementing something real, it will have a huge effect on the rest of the sector that they operate in," Smit said.

Shining BD