A Closer Look at Net-Zero Goals

This year’s report takes a closer look at firms’ net-zero goals.* We chose to focus on this p ular topic because of its pressing consequences of climate change mitigation, as well as the approaching net-zero deadlines that many firms have made for themselves. Figure 7 below shows (1) the proportion of firms with and without net-zero goals; (2) the overall timeline in which firms intend to reach their net-zero goals; and (3) firms’ readiness to reduce Scope 1, 2, and 3 emissions.

Overall, across all global respondents we can see that only a large minority (35%) report their firm having net-zero goals at all. We can also observe that among respondents who reported having net-zero goals, many appear to be unprepared for their coming deadlines. Almost half of the respondents who had net-zero goals report that their firm will not begin measuring or reducing Scope 3 emissions for five years or more. At the same time, roughly half of responses show net-zero deadlines of 2040 or earlier. Scope 3 reporting appears to be especially vexing, and how to collect reliable data across firm boundaries is still tricky.

Figure 8 shows the adoption percentage of net-zero goals by supply chain position: that is, upstream, midstream and downstream. (See Appendix A for industry groupings in each position). We observe fewer firms in the midstream show net-zero goals compared to the upstream and downstream respondents. This missing midstream—which, crucially, includes transportation and warehousing—may also contribute to the challenges that firms face when attempting to measure and reduce their Scope 3 emissions. Said one executive interview respondent, “Scope 3 is by far the hardest because you don’t directly own it. You are relying on others to give you that information. I also think there’s not a lot of standardization across how different suppliers are measuring.”

Scope 3 continues to be elusive at scale because of still evolving definitional boundaries that vary by region and vertical, as well as the sheer complexity of managing and monitoring the supply chain where much of Scope 3 lies. Many businesses are forced to use estimations, which open risk to green-washing, or set their own scope, which opens risk to shifting metrics year over year.

Katie Martin, Principal Lead, Sustainability & ESG, Avetta

Figure 7: Net-zero adoption and readiness

Figure 8: Net-zero adoption by supply chain position

Net-Zero Around the World

Net-zero goals also appear to be adopted differently around the world depending on economic development. Figure 9 shows estimates of net-zero adoption in different regions. The y-axis represents the percentage of respondents from that region that have adopted net-zero goals, with error bars based on our survey sample size. The x-axis represents the region’s 2022 gross domestic product (GDP) per capita measured in US dollars, based on 2022 World Bank estimates. The gray vertical line represents the world per capita GDP, which stands at $13,000.

Figure 9 shows that both global wealth and the adoption of net-zero goals are skewed heavily towards Europe and the United States. Based on our sample, approximately 53% of European firms have adopted net-zero goals, as have 44% of American firms. Comparatively, in our sample, Asia shows 36% adoption and Latin America 22%. (Note: Regions of the world with fewer than 30 total responses were excluded from this analysis).

Figure 9: Net-zero adoption around the world