The report highlights that over 40 percent of the world’s largest companies and many subnational governments lack a net-zero target, undermining national efforts to combat climate change. Even among those entities with net-zero targets, less than 5 percent meet the minimum credibility requirements.

Urgent action is needed to bridge the gap between intent and actual plans for emissions reduction.

The report, titled “Net Zero Stocktake 2023,” published by Net Zero Tracker, a collaboration of environmental nonprofits and research organisations, presents a comprehensive analysis of carbon neutrality targets globally. It indicates a 25 percent increase in entities with net-zero targets, predominantly in the private sector.

Currently, 929 of the world’s top 2,000 publicly-listed companies have committed to achieving net-zero emissions, up from 702 the previous year. Additionally, more countries have incorporated their climate pledges into policies or legislation. However, substantial disparities persist between countries’ intentions and the actions taken by polluting entities within their jurisdictions.

The report reveals that approximately 50 percent of individuals residing in large cities lack municipal greenhouse gas reduction targets. Moreover, 41 percent of states and regions in the world’s highest-emitting countries, along with 37 percent of the largest global companies by revenue, have no plans to mitigate climate pollution. Sectors such as healthcare, infrastructure, and retail exhibit particularly low rates of adoption, indicating a disconcerting disconnect between these entities and global goals.

Despite the growth in net-zero targets, many subnational commitments fail to meet internationally recognized credibility criteria. Only 3 percent of the 397 net-zero pledges from cities, states, and regions examined by Net Zero Tracker align with the U.N.’s “Race to Zero” campaign requirements, which include interim greenhouse gas reduction goals and annual progress reporting.

Similarly, only 4 percent of publicly-traded companies with net-zero pledges meet these standards. This lack of credibility has been a persistent issue, with net-zero targets criticised for being misleading and failing to account for emissions throughout the entire supply chain.

The quality of net-zero pledges has not significantly improved since 2022, according to the report. Most fossil fuel companies’ pledges are deemed “largely meaningless” due to their inadequate consideration of Scope 3 emissions — the emissions resulting from the consumption of their products. The report also raises concerns about emerging practices such as “insetting,” where polluters invest in carbon dioxide removal within their supply chains without independent verification or certification. These trends underscore the need for comprehensive and reliable carbon neutrality plans.

While the misalignment between targets and actions was somewhat understandable in the past, Net Zero Tracker asserts that it is no longer acceptable.

The past year has seen the convergence of guidelines from reputable organisations, including the International Organization for Standardization, the Science-Based Targets Initiative, the NewClimate Institute, the Race to Zero campaign, and a U.N. panel. Although there are differences in specific details, these groups broadly agree that net-zero commitments should encompass all emissions, including those from supply chains. They emphasise the inclusion of interim targets and alignment with science-based guidelines to limit global warming to 1.5 degrees Celsius. Notably, all five organisations now require a fossil fuel phaseout as an integral part of trustworthy net-zero pledges.

It’s been said many times already, but is worth repeating: it has become critical for countries to reinforce their net-zero commitments by garnering support from cities, states, and companies while establishing robust regulatory frameworks to ensure credibility. The upcoming U.N. climate conference in the United Arab Emirates presents an opportunity for governments to shape regulations that create a level playing field, enabling companies to accelerate their path towards net-zero. The conference will also host the first global stocktake, where countries will evaluate their progress towards international climate targets and strategize corrective measures if necessary.

Alexis McGivern, net-zero standards manager for the research initiative Oxford Net Zero, emphasises that no entity can claim ignorance regarding credible targets. Policymakers now possess the necessary tools and consensus within the accountability ecosystem to shape regulations effectively and facilitate a collective push towards net-zero.

The time for action is now.