Global

Companies • On the road to net zero, businesses have found the compass but not the map

In the space of a few years, carbon neutrality has become the polestar of corporate climate action. The spate of commitments that followed the signature of the Paris Agreement was succeeded by a phase to reinforce reporting frameworks, progress measurement, and credibility assessments of low-carbon transition plans.

Publication date

2023

Editor

Antoine Gillod • Director of the Global Observatory of Climate Action

Distant and hard to measure, net zero commitments of companies lack credible transition plans and progress monitoring

  • Since the Paris Agreement, “net zero emissions“ has become the compass of corporate climate action and a driver for their growth strategies.
  • Often unclear and limited to “operational” emissions (Scopes 1 & 2), these targets overlook value chain emissions (Scope 3), which represent 75% of companies’ carbon footprint.
  • Corporate transition plans, which should specify the means to reach carbon neutrality, are lacking precision on the required investments and changes in business models.
  • Carbon offsets via voluntary markets, gaining popularity among companies, requires greater methodological credibility and transparency, at a time when “carbon neutrality” claims are beginning to be regulated in Europe.