Companies Remain Committed to Net Zero, So How Can They Reach Their Goals?

An analysis of filings, reports, and climate data for more than 200 of the world’s largest public companies across 11 sectors, found that companies remain committed to their net zero carbon goals for 2030 and 2050.

Out of the companies surveyed by the accounting and auditing firm PricewaterhouseCoopers (PwC), 37 percent heightened their targets or expedited their timelines. Roughly 53 percent maintained their original goals, and five percent have not disclosed any net-zero plans.

While the PwC survey indicates that 90 percent of the major companies are either maintaining or accelerating their commitments, the progress toward those goals is mixed. Only 56 percent are on track to achieve their short-term Scope 1 and 2 emissions targets, which address direct emissions from a company’s operations and indirect emissions from its energy use. And just 22 percent are progressing toward their Scope 3 goals to target emissions outside of the company’s control, like from its supply chain and business travel.

“While we were encouraged by the aggressiveness of the targets, what was not so encouraging was the progress being made against those targets,” David Linich, PwC’s decarbonization and sustainable operations leader, told TriplePundit. “Ten out of the 11 sectors that we analyzed were off track to achieve net zero. The only one that was on track was the tech sector.”

Because the tech sector tends to be “more innovative early adopters by nature,” it wasn't surprising to see them moving aggressively to meet their net-zero goals, Linich said. 

“In many cases, they’re tapping into some core capabilities that they have around data and engineering,” Linich said. “They’re using that to develop internal solutions that promote greater energy efficiency within their operations and their data centers or pursuing leading-edge things like 24/7 carbon-free energy.”  

But the explosive growth in artificial intelligence is presenting new challenges for the tech sector. 

“The energy demands from artificial intelligence are pretty enormous, and there’s going to need to be an even greater push by these companies in the tech sector to find ways of further innovating from an energy efficiency standpoint,” Linich said. “They’re also going to need to be more aggressive on the energy supply front in order to procure more renewable sources of energy to feed this increasing energy demand.”

Three main obstacles are preventing companies from making progress against their targets: doing the math to have a detailed plan, building a balanced portfolio of projects that provide short-term and long-term returns on investment, and executing plans effectively, Linich said. Still, each of these obstacles is surmountable. 

To tackle them, companies must carefully calculate their approach to decarbonization for clarity and precision, Linich said. Without these specifics, they’re shooting in the dark and will likely miss their targets.

Many companies are overly focused on the simplest projects that produce the highest return on investment, he said.

“They’re essentially kicking the can down the road and making it harder for the next set of leaders to ultimately achieve that target,” Linich said. “Many of the actions that remove the most carbon may have a longer payback period attached to them.”

The complexity of decarbonization efforts is often underestimated, he said. It involves numerous cross-functional projects, third-party engagements and regulatory approvals.

“When you’re talking about this level of complexity, it requires a level of coordination that’s often lacking,” Linich said.

Of these obstacles, getting the calculations on target is the most important, Linich said. That means creating a detailed plan that forecasts future emissions trends because, as a business expands, emissions can increase without intervention. It’s critical to outline specific actions, how much carbon they will mitigate, their cost, who will implement them, and potential tax credits or incentives for funding support.

“You’ve got to have that detailed plan in place, and that can also help with addressing those two other obstacles in terms of balancing the short-term and long-term return on investment projects because you’ll have good visibility into what actions to take,” Linich told 3p. “Regardless of how long it takes to get a payback, you’re now clear-eyed in knowing what you should do and when [you should do it] in order to achieve your target.”

It's encouraging that more than a third of the companies surveyed are more ambitious in their new net zero goals, he said. 

“CEOs are seeing their peers make aggressive commitments, and it’s motivating them to step up their commitments as well,” Linich said. “In other cases, companies achieve their targets ahead of schedule, or maybe they set a low bar to begin with, and that’s prompted new and more aggressive goals for some of the companies we studied.”

In light of evolving political and social climates, the level of resilience to these commitments was surprising to see, he said.

“We’re seeing that customers and employees are demanding action, investors are favoring it, regulations are requiring it,” Linich said. “We’re also seeing that this is very personal for many people. Their children and grandchildren are crying out for more to be done.”