Private firms lagging listed corporates in setting net-zero targets

The organisation compared the climate plans of the world’s 100 largest private firms, plus the world’s largest 100 public firms. 69% of publicly-listed companies have publicly disclosed a net-zero target, compared with just 32% of privately-owned firms.

Worryingly, the gap was found to be more pronounced in corporates in high-emitting sectors, with 70% of public fossil fuel, infrastructure, manufacturing and materials companies listing a goal, compared to 17% in the private sector.

Only one private firm in this category, INEOS, has publicly released a plan for reaching its long-term net-zero target. Net Zero Tracker believes this target is ‘inadequate’, not meeting the minimum starting criteria for the UN-backed Race to Zero campaign.

Moreover, all ten of the largest public firms have a net-zero target, but none of the ten largest private firms do. The largest private firms with no net-zero target are metals and oil giant Trafigura Group; Dutch energy and commodity trader Vitol Group; American conglomerate Koch Industries and Indian conglomerate Tata Group.

Net Zero Tracker also found a significant gap between the credibility and integrity of climate plans from private firms compared with listed firms. 73% of the publicly-listed companies have disclosed plans to reach their long-term climate goals, compared with just 13%.

The report calls this lack of target-setting and reporting a ‘multi-trillion-dollar blind spot’. It calls on national governments to agree on measures to mandate ‘whole economy’ climate disclosures, lest they risk their goals being undermined by private companies in high-emitting sectors. It notes that many private companies are in the value chain of public companies, which are increasingly being mandated to disclose emissions, including indirect (Scope 3) emissions.

Commenting on the findings, the Energy & Climate Intelligence Unit’s (ECIU) senior associate Richard Black said: “As major players in key commodities such as energy, food and manufacturing, private firms without net zero targets are stalling the progress of the entire business ecosystem, while hindering their own ability to shape the world’s greatest megatrend.

“By opting out of net zero, private firms are missing the opportunity that many listed firms are now seizing upon – to turn climate risk into opportunity. As the largest private firms are ‘too big to fail’, their failure to adapt to the inevitable has major ramifications for economies.”

Energy: Missing in action?

In related news, the Transition Pathway Initiative Global Climate Transition Centre (TPI Centre) at the Grantham Research Institute has published an analysis of listed energy companies’ plans to reduce emissions. The findings are as concerning as those from Net Zero Tracker.

The TPI Centre looked at the climate plans of the world’s 132 biggest publicly listed companies in oil and gas production; oil and gas distribution; coal mining and the electric utility sectors. Of these firms, 51% have not publicly published a decarbonisation strategy, outlining how they intend to meet long and mid-term targets.

Without strategies, the TPI Centre team has concluded, companies are ill-prepared to incest in the transition. Nine in ten do not disclose how to align their capital expenditures with the low-carbon transition.

Just one-third of the companies have emissions pathways that are set to be compatible with the Paris Agreement’s 1.5C pathway, the research found. A further one-third would align with its 2C pathway. The researchers have stated that there is “much room for improvement” in making targets in this sector science-based.

“Unquestionably, companies are transitioning and ambitious targets are being set and not just in the long term but also over the short and medium,” TPI chairman Adam Matthews said.

“However, with over half the energy sector still to set meaningful targets and the vast majority yet to demonstrate alignment of their capital expenditure the challenge for investors remains considerable.”

The TPI is supported by 131 asset owners and managers, representing more than $50trn in combined assets under management and advice.