Number of companies setting science-based targets grows rapidly

The number of European companies with approved science-based climate targets rose by 85% through 2021. According to new analysis, the included companies are responsible for a third of the continent’s reported emissions.

With the window for comprehensive action on climate change closing by the day, a new report has found that more businesses than ever are announcing climate targets backed by scientific analysis.

According to a study by CDP, a non-profit running the global environmental disclosure system, and global management consultancy Oliver Wyman, 24% of Europe’s businesses adopted science-based climate targets last year.

This sees the continent leading the charge on the matter. Only a combined 19% of North America’s businesses have made the same step – while the rest of the world sees an even lower 12%. A larger number of Europe’s businesses are also taking the most ambitious form of action, with 16% now targeting cuts in emissions that would align them to the 1.5C targets set out in the Paris Climate Accord.

With that being said, the historic actions of North America and Europe since the industrial revolution mean that the regions arguably have more to answer for in regards to pollution. In that regard, the fact more than three-quarters of all businesses in both continents have failed to commit to science-based targets represents an alarming lack of progress.

At the same time, most of the companies with science-based targets are yet to commit to reporting on the progress they make towards them. While the number of firms not reporting their targets to CDP in Europe in 2020 has fallen from 83% to 58% in 2021, a majority are still not part of the Science Based Targets Initiative (SBTI). The SBTi, a collaboration between CDP, the United Nations Global Compact, the World Resources Institute, and WWF.

On top of this, companies tend not to disclose data around their indirect (scope 3) emissions at all. These include supply chain emissions, purchased goods, leased spaces, and employee commuting, among other factors – and represent 86% of company’s total emissions, or six times those they produce directly. However, just 53% of companies report data on their most important sources of these indirect emissions. To push ahead on this front, the researchers suggested policymakers and private investors needed to do more to pressure companies.

The study concluded, “In sectors such as steel, cement, and transport services, decarbonising at a rate consistent with a 1.5°C-aligned pathway will depend on the commercialisation of breakthrough technologies such as green hydrogen and CCUS… A growing focus from policymakers and finance providers on hard-to-abate sectors, where alignment to 1.5°C is lagging, creates a further opportunity to raise the ambition.”