Only 1 in 20 of Europe's largest companies on track for net-zero

26 October 2021 Consultancy.uk 4 min. read
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With the UK currently hosting the COP26 climate conference, a shocking new release has suggested just 5% of Europe’s largest businesses are on course to become net-zero by 2050. The prediction comes as lobbying groups pressure world-leaders to use legislation to push businesses to take faster action.

According to Accenture, only one in every 20 of Europe’s biggest listed companies will achieve their net-zero pledges, unless they speed up emissions cuts over the next decade. Analysis from the consultancy suggests that almost one-third of those companies have committed to reaching net-zero by 2050 – the latest possible year for the target – and even then, only 9% of those are on course to succeed if they continue the pace of reduction between 2010 and 2019.

“Net-zero will be feasible only with swift, decisive action in this decade. It is possible, but only if European businesses act now,” Jean-Marc Ollagnier, Chief Executive Officer of Accenture in Europe, warned. “Progress will only come from a radical rethink of business models, including technological investments, creating greener supply chains, and treating carbon reduction plans with the same rigor as financial budgets.”

5% of companies are on track to reach net zero operations in line with their own target, and 9% before 2050

The findings come as the UK prepares to host the 2021 United Nations Climate Change Conference (COP26). The 26th United Nations Climate Change conference is scheduled to be held in the city of Glasgow in early November 2021, with the conference currently under the presidency of the UK. The high-profile event has seen criticism of perceived inaction on climate change ramp up in the UK – particularly in relation to the impact big business is having on global carbon emissions.

For example, the World Wildlife Fund (WWF) is currently urging the British Chancellor to ensure that the UK delivers on its climate promises by committing more significant funding to the changes needed. However, the WWF is also targeting businesses it sees as dragging their feet on net-zero targets, calling on the Government to legislate in a way that would force businesses to publish detailed plans on how they will reduce their emissions.

The WWF’s ire is based on the organisation’s own examination of public net-zero commitments by FTSE 100 companies, which found that their plans to curb emissions fall far short of what is needed. Without action, the WWF estimated that the companies are on a pathway of 3C of warming – and the WWF warned that the current reliance on a voluntary approach by the private sector was therefore not enough.

Share of companies projected to reach net zero operations in the specified timeframe

By the WWF’s reckoning, to date, 29% of the UK’s biggest businesses still haven’t made any commitment to reach net-zero and only 19% of the country’s biggest companies have the detailed plans needed that set out how they will meet their net-zero targets by 2050. However, further commenting on Accenture’s research, Ollagnier insisted that European businesses were in fact more determined than ever to in the race to attain net-zero, and encouraged more companies to publicise targets to speed momentum.

He went on, “As our study shows, the targets work. Net-zero should be managed as any strategic business priority: set clear objectives to drive the entire organisation to the same direction, and monitor progress to correct the trajectory as appropriate. Making targets public also helps create the required collective momentum, as companies can’t solve it alone.”

Accenture estimates that if firms do help build momentum by being more transparent in this way, the prognosis could be much brighter. With accelerated action, 42% of companies in our sample would reach net zero operations in line with their own targets, and 83% before 2050.

The targets set by carbon-intensive businesses in particular reflect commitment to transformative change

In particular, Accenture’s study picked out carbon-intensive businesses as reflecting this commitment to change – with oil and gas operators in particular aiming to be net-zero in 20 years. However, many other laggard industries are not doing all that they could. Mining, metals and minerals processing and utilities in particular will be cutting it fine with the 2050 deadline.

The professional services sector sees its average net-zero expectancy currently estimated at 2038, meanwhile. This is in spite of a mounting number of consultancies publishing plans to hit net-zero within the present decade – as well as growing numbers announcing science-based targets.

Ollagnier concluded, “Solutions differ by industry and company, and all have different starting points, opportunities and challenges. In some industries, the required technologies are available and will need to be scaled at speed. In others, they will have to be invented. However, getting there will require all businesses to make reinvention the norm, driven by technological innovation, collaboration, new business models and supportive regulation.”