The UN Race To Zero Provides New Guide To Corporate Net Zero Targets
As of August 2021, 47 FTSE100 constituents have committed to joining the UN’s ‘Race To Zero’, the largest global alliance committed to achieving net zero carbon emissions by 2050. Industry leaders in diverse sectors have pledged support to the cause, including tech giant Aveva, Unilever, Astrazeneca, Legal & General, Tesco, and Sainsburys. Currently, firms committed to the initiative have a combined market value of over a trillion pounds. The popularity of ‘Race To Zero’ demonstrates the increasing pressure firms face to commit to net zero targets ahead of COP26, but the UN initiative fails to offer a comprehensive methodology for firms to follow.
Both the ‘Race To Zero’ and SBTi seek to provide some structure and accountability to the murky process that is making a Net Zero goal. Firms face difficult questions when seeking to decarbonize, regarding scope, timeframe, regulatory developments, and broader integration with business strategy. Verdantix analysis identified several success factors for net zero target commitments, including the need to demonstrate credibility of net zero emissions pledges with thorough validation and setting a realistic timeframe for neutrality, with actionable interim targets. For more information, see upcoming Verdantix FTSE100 Net Zero Emissions Targets Reveal Critical Success Factors.
How does the ‘Race To Zero’ stack up against net zero target frameworks, such as those provided by the Science Based Targets initiative (SBTi)? At this stage, the two are complementary. The ‘Race To Zero’ identifies four criteria necessary to join the movement: Pledge, Plan, Proceed, and Publish. Thematically, the requirements for interim goals, abatement across Scope 3 emissions, and a preference for carbon reduction – over extensive use of offsetting, such as carbon credits - are similar across both the ‘Race To Zero’ and SBTi. The latter however necessitates a greater degree of specification in exactly how operations will be decarbonized, and with a larger focus on scope 3 decarbonization. It’s not surprising therefore that the ‘Race To Zero’ is more popular than the SBTi; Verdantix analysis shows that only 35% of the FTSE100 currently have an SBTi-ratified goal. The ‘Race To Zero’ is at this stage still a pledge-making phenomenon, and too vague in reporting requirements, scope, and operational requirements to help businesses on the decarbonization path.