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Nearly a third of companies fail to meet decarbonisation targets

 — 1 minute read

Not all businesses have been able to live up to their often ambitious targets.

New research from Bain & Company has revealed that many companies have struggled to deliver on their ambitious emissions reduction pledges with effective action.

According to the firm, 31 per cent of businesses that set and published scope 1 and 2 emissions reduction targets for 2020 had failed to meet them, including more than a quarter who missed their target by 80 per cent or more.

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Scope 1 emissions occur from sources that are owned or controlled by a company while scope 2 emissions include the indirect emissions from the generation of purchased energy.

Bain & Company said that living up to the growing number of net zero commitments had become an overwhelming challenge for some business leaders.

In the wake of last year’s COP26 summit, the firm identified a surge in science-based targets being submitted to CDP, which runs the world's largest environmental disclosure system.

Globally, the number of organisations with science-based commitments increased from 775 in 2020 to 2,843 in 2022. More than half - 57 per cent - of these commitments came from firms in Europe, the Middle East and Africa, followed by 24 per cent in the Asia-Pacific region, and 19 per cent in the Americas.

“2021 was a year of ambition setting catalysed by COP26,” said Torsten Lichtenau, senior partner leading Bain & Company's global Carbon Transition Impact Area.

“In 2022, the focus is shifting to delivery against the ambition and monetising low carbon leadership with customers in order to be able to reinvest in the topic.”

Bain & Company offered up a number of suggestions in order to help businesses bridge the gap between ambition and action.

The firm emphasised that the carbon transition needed to be tackled through engagement with the wider ecosystem of customers, suppliers, peers, governments and society.

Additionally, they suggested that executives should strengthen their dialogue with investors with a focus on strategic clarity to address their green ambition and growth, and return aspirations.

“CEOs have been bold in setting ambitious targets, while the roadmap to full delivery is still unclear and highly challenging," said Bain & Company's sustainability & responsibility practice co-leader Jenny Davis-Peccoud.

"Successful leaders bring together what we call 'dreamers' and 'doers' in their executive teams to get to pragmatic solutions to visionary goals, steering toward net zero even through the macroeconomic and political turbulence in which we find ourselves."

Nearly a third of companies fail to meet decarbonisation targets

Not all businesses have been able to live up to their often ambitious targets.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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