Where does ownership and responsibility sit for hitting net-zero targets?

Net-zero commitments, with an attached timeline, now cover more than 20% of the world’s largest corporations and account for 68% of global GDP. 

While these kinds of commitments are an essential marker of progress, the challenge now is how to deliver on these goals. 

The reality is that only 20% of the Net-zero pledges made actually line up with science-based targets, which has led to growing scepticism about how precisely these goals will be achieved. 

 So, when a company makes a net-zero pledge, who exactly is responsible for it? Unfortunately, all too often, no one is. 

Gaming the system 

A large part of the scepticism attached to net-zero pledges is that it has become increasingly easy for companies to ‘game’ the system and make commitments without making real progress. 

This is because many organisations lack accountability regarding their net-zero ambitions, instead relying on marketing ploys or greenwashing strategies to establish a progressive image of the company. There is also a misconception that outsourcing activities such as cloud storage means outsourcing the carbon needed to store your data. Whilst no longer in-house, any activity in the supply chain needs to be factored into your overall carbon accounting system.  

Since many Environmental, Social, and Governance (ESG) targets have deadlines far into the future, 2050 being a popular target date, companies are able to make big claims now whilst delaying action until tomorrow. 

Additionally, there is currently no legal framework to enforce net-zero pledges and ensure companies are actually making progress. While there may be public pressure to act, it is not enough for many organisations, and a lack of accountability exists for those who fail to reach their ambitious targets. 

It might come as no surprise, then, that when pressed on how they are to implement their net-zero target, a number of large oil and gas giants simply admitted their plans were “ambitions" rather than specific strategies. 

Credit Suisse has even said the quiet part out loud by admitting they had no idea how they are going to reach their stated net-zero goals. 

In short, it benefits companies to set ESG targets, because it improves their social licence to operate, among a host of other benefits. But it also benefits them to make these targets as obscure and intangible as possible – because that way, they won't be held accountable if they don't achieve them. 

In the absence of any clear definition of what a company's ESG goals should look like, companies have been able to make broad statements about their commitment to sustainability. 

This has created a situation where there is little accountability for these companies’ ESG performance. This prevents companies from assigning ‘owners’ or leadership to oversee tangible outcomes of corporate sustainability initiatives. 

Even where regulatory bodies, such as the UK government, step in to force companies to have a public plan to back up their net-zero commitment, they have been clear that they are not "making firm-level net-zero commitments mandatory." 

Data from the Science-Based Targets initiative (SBTi) shows that, of the 2,007 companies that have made net-zero science-based targets, only 983 have had them approved by the SBTi as realistic. 

What we can see from these figures is that a significant portion of organisations have not made concrete commitments to achieving their goals. They are also struggling to prove their goal is achievable. 

How can companies take greater responsibility and promote transparency? 

Taking ownership of a net-zero pledge isn't about assigning it to a single person. In fact, having one person be responsible for a company's net-zero goals is unrealistic and can be further gamed by passing the buck and shuffling the responsibility. 

Instead, there are steps companies can take to ensure accountability, including: 

Setting near term science-based targets 

Companies should set ambitious, measurable and time-bound goals that are consistent with the Paris Agreement. 

Reporting on progress regularly was a critical aspect of accountability when it comes to sustainability. 

Reporting on progress publicly in order to meet targets and hold the organisation to account. This can range from setting up an online dashboard or releasing an annual report. This will help to provide transparency and demonstrate progress towards goals. 

Having these targets overseen and approved by a 3rd party organisation, such as the Science-Based Targets initiative (SBTi), is also beneficial. This helps to ensure that the company is following through on their commitments and provides additional assurance to stakeholders. 

Setting long-term science-based targets 

While short-term targets are normally based on reducing scopes 1, 2, and 3 emissions to zero, science-based targets can help to set a more ambitious long-term trajectory for the company. 

The reality is that, while most companies can reduce their carbon emission by 90-95%, they should not be able to declare themselves carbon neutral unless they have a plan in place to offset the remaining 5%-10%. 

Solutions such as carbon credits from land restoration or renewable energy projects can be implemented to offset emissions and should form part of the long-term strategy for achieving total carbon neutrality. 

Invest in complete transparency and responsibility 

Committing to a vague target of “carbon neutrality” isn’t enough; companies need to make sure they are taking full responsibility for reducing their emissions and offsetting any that cannot be avoided.  

This means investing in complete transparency throughout the company so that everyone is aware of the environmental impact of their actions. Companies should also invest resources into developing a comprehensive carbon accounting system to accurately measure their carbon footprint. 

Ownership should not simply be an opportunity for convenient scapegoating, but rather a chance for companies to ensure that the necessary steps are being taken to reduce their emissions and offset any unavoidable ones. 

Furthermore, businesses must build relationships with trusted partners to ensure that offsets are credible and legitimate, so that their environmental impact is minimised to the greatest extent possible. 

By implementing such measures, businesses can ensure that their environmental impact is as low as possible and demonstrate a genuine commitment to sustainability. 

Next step 

It’s time to take ownership of your ESG targets. If you’d like to discuss how to accurately measure, monitor and begin to decarbonise your digital, book an introductory call with the team today.