PARIS – Only 40 of the world’s 100 largest private firms have set net-zero carbon emissions targets to fight climate change, according to a report released on April 22, lagging far behind public companies.

But for the world to meet the 2015 Paris Agreement to limit global warming to 1.5 deg C, all companies need to reduce their planet-heating emissions, the report by the group Net Zero Tracker noted.

The lack of market and reputational pressures on private firms compared with those publicly listed, along with an absence of regulation, is to blame for their slow uptake of climate commitments, Mr John Lang of Net Zero Tracker told AFP.

“I think things are changing on all three of those fronts,” he added.

The report compared 200 of the world’s largest public and private companies based on their reported emissions reduction strategies and net-zero targets.

It found that only 40 of the 100 private firms assessed had net-zero targets, compared with 70 of 100 publicly listed companies.

Of the private companies that have set targets, just eight have published plans on how they will meet them.

“A pledge without a plan is not a pledge; it is a naked public relations stunt,” the report said.

Regulations coming

Only two firms – furnishing giant Ikea and US engineering giant Bechtel – ruled out using controversial carbon credits to achieve their net-zero goals, the report said.

Carbon credits allow businesses to offset their emissions by directing money towards a project that reduces or avoids emissions, such as protecting forests, but critics say they allow companies to keep polluting.

Meanwhile, none of the eight fossil fuel companies included in the report was found to have a net-zero target, compared with 76 per cent of the sector’s largest public firms.

There was also little improvement in the figures compared with a previous analysis done in 2022, “despite a massive uptick in regulation around the world”, Mr Lang said.

Several jurisdictions, including Britain, have adopted climate disclosure regulations.

Others have regulations on the horizon, with the business hubs of California and Singapore requiring greenhouse gas emissions reporting from 2027.

The European Union introduced two climate regulations – the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive – which will soon require thousands of large companies to report their climate impacts and emissions, and to take action to curtail them.

“We’re trying to get private firms to understand what’s coming for them,” Mr Lang said.

‘Trickle-down effect’

The EU policies will have far-reaching effects in particular, targeting firms not only based in the bloc but also those that may be headquartered elsewhere, with branches or subsidiaries within the member states.

Yet just two European private firms, including French hypermarket chain E.Leclerc, were singled out in the report for having set any emissions reduction targets.

E.Leclerc told AFP that the company has made efforts towards more sustainable practices, like eliminating the use of single-use plastic bags, and is “committed to setting near-term companywide emissions reduction targets”.

But with the enforcement of EU regulations looming, firms will not be able to “dodge” climate targets much longer, Ms Sybrig Smit of the NewClimate Institute told AFP.

“It’s actually quite watertight. If companies want to do business in Europe, they are going to have to face the consequences,” she said.

The firms analysed account for roughly 23 per cent of the global economy, with the majority based in China, the United States or the EU states – the biggest emitters of greenhouse gases, Mr Lang said.

Any changes that the firms make to meet new regulations will have substantial benefits for the environment.

Ms Smit said: “They have such a trickle-down effect. Whenever such a big company is implementing something real, it will have a huge effect on the rest of the sector that it operates in.” AFP