More companies are setting net zero targets than ever before. Three quarters of companies with a senior sustainability executive are increasing their budgets to reach net zero.
The catch is, many of these companies are not communicating about the climate action they are taking.
These are some of the key findings from South Pole’s latest Net Zero Report: Destination Zero. While this report should encourage companies across the world to set, or double down on, net zero targets, more companies need to be going further, faster – especially against the backdrop of increasing, multi-billion-dollar climate disasters.
The report surveyed 1,400 sustainability professionals at director level to understand what drives their big climate commitments, what they see as risks, the solutions they are turning to, and how their organisations are progressing on a net zero emissions journey.
First, the bad news. The report found that most of the world’s companies are still doing nothing or very little when it comes to climate action. 92% of listed companies across the world do not have a publicly stated net zero commitment – a truly shocking figure.
However, the report revealed that the small but significant group of so-called climate-conscious companies – those with a dedicated sustainability or CSR lead in senior management – are doubling down on climate action. Over three quarters (76%) of climate-conscious companies are in fact increasing their net zero budgets.
In addition, companies clearly understand that communicating about the climate action they are taking is good for their business. The overwhelming majority (93%) of surveyed companies see the communication of their net zero strategy as key to commercial success.
This is a huge win. Taking climate action is simply good business and companies are starting to put their money where their mouth is – or rather where their mouth was. The survey also shows, concerningly, that the majority of companies who found communicating their climate action more difficult are decreasing their level of communications. This trend of greenhushing is prevalent across 9 of the 14 sectors surveyed.
Our report offers a rare glimpse into a core tension at the heart of corporate climate action: it reveals that increased and unclear regulation and industry requirements for corporate climate reporting, as well as heightened scrutiny from various stakeholders including media, are the core reasons for companies keeping quiet about their climate goals and progress.
Why is this a problem? Considering our efforts to reach net zero are often referred to as a moon shot, imagine the Apollo 11 Mission and the lead up to this historic feat happening in total secrecy and silence. Would international competition and the race for best solutions have been so fierce? Would it have happened without public moments and calls-to-action like JFK’s, ‘we choose to go to the moon’ address? I am no astronaut, but I somehow doubt it.
Coming down to earth, companies credibly and proudly communicating the work they are doing is critically important to spurring competition, action and, crucially, climate finance to the fledgling solutions science says we need. If more businesses lead from the front by speaking openly about their goals, this will spur the many others who are yet to set targets.
While it is easy to despair, I am genuinely hopeful. It is clear that corporate climate action is maturing.
More governments are now writing or implementing laws that push companies to report on their overall sustainability work, and to weed out those who have nothing to show. This means the trends we are seeing could be the proverbial calm before the (regulatory) storm, which will inevitably require all companies to disclose and discuss their impact on the climate and environment. Getting ahead of regulation will give companies the upper hand and deliver real value to shareholders, customers, our climate and environment.
To seize this opportunity, corporate net zero targets need to be underpinned by credible actions if they are to have their intended impact. This includes setting science-based milestones that drive down direct emissions and support collective resilience, while incentivising investments in future climate innovation, beyond corporate value chains. This applies above all to resource-intense companies with complex value chains. When considering investments in activities beyond a companies value chain, the focus should be on meaningful, high-quality, high-impact projects that really move the needle on reducing emissions but also carry other positive impacts for nature and communities. Without such milestones, targets ring hollow.
Companies leading this movement will bypass “’greenhushing” to communicate their actions and lessons learned in a credible and nuanced way. These efforts may not be perfect, but they will help drive progress, improve standards, and level the playing field.
Make no mistake, it is the committed corporate climate leaders who will blaze the trail down which the climate laggards will eventually be frog-marched by regulators. Which is why, now more than ever, it is time for all companies to meet the moment, to step up and, importantly, speak up on climate action.