Many Firms Falling Short In Aligning Climate Commitments With Paris Agreement's Goals

The sustainability insight, innovation and capital firm, cKinetics in a report said that the 2030 targets of many companies are not in line with the Paris Agreement, but 2050 net-zero goals are. 

The Paris Agreement has set clear goals for countries and businesses to reduce their carbon emissions and mitigate the impacts of climate change. 

"However, only a limited number of companies have aligned their climate commitments with the agreement's goals," said the report titled 'Decoding corporate climate pledges'. 

As per the Paris Agreement, the world needs to halve its emissions by 2030 and attain net-zero emissions by 2050 to avoid the disastrous impacts of climate change. 

However, only 24 per cent of companies have committed to halving their emissions on or before 2030, indicating a significant deviation from the specified pathway.

Even when companies have set science-based targets initiative (SBTi)-validated goals, they still deviate from the standard pathway specified, it stated.

For example, Tech Mahindra has set a goal to reduce absolute scopes one and two greenhouse gas (GHG) emissions by 22 per cent by 2030 and 50 per cent by 2050.

"While most companies have targeted to reduce their emissions by less than 50 per cent by 2030, or if they are targeting a reduction of 50 per cent, they have increased their timeline to 2050," it added.

Most companies setting net-zero goals have committed to achieving them before or by 2050, which is in line with the Paris Agreement's goal to limit global warming to below two degree Celsius. 

Interestingly, twice the number of companies are targeting net zero before 2050 as compared to those targeting it by 2050. 

However, it is noteworthy that the Steel Authority of India, a public sector unit, is the only company targeting net zero by 2070, indicating a myopic view among companies to have more ambitious targets for distant years, it mentioned.

Companies tend to set more realistic near-term targets, but once on the path to reducing their emissions, they may accelerate their emissions reduction to achieve a low-carbon pathway. 

According to the report, "This underscores the need for businesses to set more ambitious and near-term goals to accelerate the transition to a sustainable economy."