Analysis: the potential impact of existing climate commitments

Sustainability

Last updated: 10. Jul 2023

Global climate targets are within reach if large businesses close the gap between commitment and action.

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Dr. Alexander Schmidt

Head of Science, Sustainability, and Climate Research

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Evan Farbstein

Content Writer

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Table of Contents

Normative research reveals that over three-quarters of global carbon emissions from fossil fuels and industry result from the activities of a small number of enterprises – all of which have existing carbon reduction targets.

This highlights an energizing point in the fight against climate change: if businesses are able to follow through on their commitments and achieve net zero throughout their value chains, global climate targets are still within reach.

The research

To explore the effects of closing the gap between commitments and climate action, Normative investigated publicly traded companies with existing carbon reduction commitments from around the world. 

The research reveals that 1,062 enterprises – 0.3% of all large businesses worldwide1 – account for an estimated 77%2 of global carbon emissions from fossil fuels and industry.3

If these businesses meet their carbon reduction targets and achieve net zero, Normative estimates that the world will achieve a 77% reduction in global industry emissions – bringing us close to reaching net zero industry emissions globally.

These findings highlight the enormous potential of reaching the target of net-zero emissions by 2050 at the latest by closing the gap between commitments and action to decarbonize large enterprises. 

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Accurate calculation empowers effective action

While we have reached a critical mass in carbon reduction commitments, actions taken on the basis of incomplete calculations will have incomplete results. 

Therefore, to reach the needed reductions and mitigate the worst effects of climate change, businesses need to fully account for their emissions.

However, 90% of businesses aren’t accounting for their full emissions.4 Value chain emissions in particular are often neglected, which on average account for 90%5 of a business’s carbon footprint. 

Accurate emissions data enables businesses to steer their sustainable investment to where it has the largest impact, getting the most value for their money. This value is not limited to sustainability. When companies take action, they both unlock business benefits – such as building brand equity and identifying inefficiencies – and mitigate risks, including allegations of greenwashing and regulatory non-compliance

By using science-based carbon accounting to manage their emissions, businesses can take informed reduction action – empowering them to play their part in the global effort to reach net zero while simultaneously generating business value.

Emissions calculations with industry-leading accuracy

With its science-based methodology, Normative’s carbon accounting keeps businesses competitive, compliant, and equipped to reach net zero.

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References

1 There are about 350,000 large businesses worldwide in 2021 (Statista here and here).

2 Own research based on publicly disclosed emissions data via GRI and Exiobase industry data for companies without publicly available records of their emissions.

3 2020 data on fossil fuels and industry emissions, excluding land use, land-use change, and forestry, a total of 34.81 bn metric tons of CO2.