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January 31, 2024

Even climate-conscious companies aren’t talking about net zero

Half of the world’s 2,000 largest companies have pledged to cut emissions. New research shows why they are keeping quiet about progress.

Catalysed by a landmark UN Intergovernmental Panel on Climate Change (IPCC) report and bold policies such as the UK’s net zero 2050 target (which became law in 2019), 2020 was the year that net zero went mainstream.

ESG elephant in room
Despite having made net-zero commitments, there remains a hesitancy to confront and disclose progress within many boardrooms. (Image by Leremy/Shutterstock.)

By the end of that year, more than 110 countries, and 417 of the world’s 2,000 largest companies, had pledged to reach net-zero carbon emissions, which is what the IPCC had indicated would be crucial to meeting the Paris Agreement target of keeping temperature rises below 1.5°C by mid-century.

Since then, the popularity of corporate net zero has only increased, with 50% (1,003) of the world’s 2,000 largest companies having committed to a net-zero target by the end of last year. Of the UK-based companies on that list of 2,000, 94% (72 out of 77) have set such targets.

New data, however, shows that companies that have already made that pledge are increasingly unwilling to talk about their progress against net-zero targets. In a new survey shared exclusively with Spotlight, 44% of the world’s most climate-conscious companies say that their climate communications have become more difficult in the past year. A further 58% of surveyed companies say they are now deliberately planning to say less in public about their net zero progress.

The survey, which was carried out by environmental consultancy South Pole, covered 1,400 climate-conscious companies with dedicated sustainability leads, across 12 countries and 14 sectors. The main reason cited by companies for talking less about climate change was the expectation of more demanding industry regulation under globally recognised schemes such as the science-based targets initiative (cited by 57% of companies), followed by heightened scrutiny from customers (45%), and lack of sufficient data to inform claims (43%). Other reasons include increased media scrutiny (41%) and investor pressure (38%).

“In the past, making a net-zero claim could have various interpretations, so it was also not difficult for a company to make a net-zero pledge,” René Groot Bruinderink, head of UK and Netherlands at South Pole, told Spotlight. Standards were looser then, and people had less of an understanding of what reaching net zero actually entailed. “Now we are having conversations with our clients where they say: We set this target for 2030 a few years ago, but now it is proving much more difficult than we thought. Meanwhile, standards are becoming more stringent, therefore we are talking about our target less, and considering pushing our target back.”

Nearly a third of companies polled said that they found the delivery of their net-zero strategy to be more challenging than they expected. The industries struggling the most with communicating their climate efforts were automobiles (67%t), utilities (62%), and companies working in real estate (60%). All three are among the sectors facing the biggest disruptions in transitioning to net-zero emissions.

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Of particular concern is the fact that these are supposed to be the most climate-conscious companies in the world, notes Groot Bruinderink. If they are no longer talking about climate change, then there is a risk that companies that are less committed to net zero will follow suit.

Also of concern is that investor pressure was among the least common reasons cited for reducing climate communications, with just 22% of climate-conscious companies now reporting investor pressure as a key driver of net zero. Many had hoped that, following the launch of the Glasgow Financial Alliance for Net Zero (GFANZ) – a collaboration of financial institutions looking to advance decarbonisation – at Cop26 in Glasgow, investors would be a major catalyst in the green transition of the economy. But the survey results suggest that this is not the case.

“Investors continue to look for short-term returns, and they are beginning to realise that for companies to go to net zero, this is a long-term strategy that does not fit with their strategy,” said Groot Bruinderink.

In the past couple of years, high-profile sustainability-focused companies, such as Unilever, have been attacked for over-prioritising climate change. Meanwhile, a recent analysis of the world’s 69 largest asset managers – whose investments collectively represent 60% of the world economy – by the non-profit organisation ShareAction found that just 3% of shareholder resolutions aimed at improving companies’ climate impacts passed in 2023. In 2021, 21% of assessed resolutions passed.

“What we are seeing is asset managers turning their backs on people and planet on an unprecedented scale,” said Claudia Gray, head of financial sector research at ShareAction. “Efforts to change urgent climate, biodiversity and social issues will face a steep uphill struggle if asset managers do not support them.”

Nick Ferris is a data journalist at New Statesman Media Group.

This article originally appeared as part of Spotlight in the New Statesman. 

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