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'Deficit of credibility': UN deepens benchmarking of corporate net-zero pledges

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U.N. Secretary-General António Guterres delivers a speech at the COP26 climate summit in Glasgow, Scotland, on Nov. 1.
Source: WPA Pool/Getty Images News via Getty Images

To read all of our coverage of COP26, click here.

As world leaders took to the stage at the COP26 climate summit in Glasgow, Scotland, on Nov. 1, United Nations Secretary-General António Guterres announced the creation of a new expert panel to analyze net-zero emissions pledges in the private sector.

Keeping alive the 1.5 degrees C global warming limit from the Paris Agreement on climate change requires tighter standards around tracking greenhouse gas emissions, Guterres told delegates.

"There is a deficit of credibility and a surplus of confusion over emissions reductions and net-zero targets, with different meanings and different metrics," the secretary-general said.

"That is why, beyond the mechanisms already established in the Paris Agreement, I am announcing today that I will establish a group of experts to propose clear standards to measure and analyze net-zero commitments from non-state actors," he said.

While the plan remains light on detail, the announcement was a positive surprise to Faustine Delasalle, co-executive director of the Mission Possible Partnership, which works on climate action with 300 companies in industrial sectors that are difficult to decarbonize, such as steel and cement.

"I think it's a good move," Delasalle said in a Nov. 2 interview. "My hope is that this group of experts will not reinvent the wheel," with a lot of work having already been done to define standards that can be leveraged by the U.N. panel, she said.

Experts ought to also remember that there is no one-size-fits-all approach, given the varying degrees of decarbonization challenges between industries, Delasalle said. Instead, focus should be on nearer-term targets for 2030 and actions beyond target-setting, such as investments in cleaner technologies and assets.

Setting credible targets

In the run-up to COP26, the Science Based Targets initiative laid out Oct. 28 what it called the world's first corporate net-zero standard. Piloted by companies such as Danish wind developer Ørsted A/S and pharmaceuticals giant AstraZeneca PLC, the standard requires businesses to take rapid action to halve emissions before 2030 and set long-term goals to reduce emissions by 90-95% before 2050.

"Companies are currently self-defining net-zero targets without credible and independent assessment of their ambition and integrity," Alberto Carrillo Pineda, co-founder and managing director of the Science Based Targets initiative, said in a statement.

The organization's standard "offers companies robust certification to demonstrate to consumers, investors and regulators that their net-zero targets are reducing emissions at the pace and scale required to keep global warming to 1.5 degrees," Carrillo Pineda said.

Standardization could help businesses set more tangible goals on their way to net-zero, a term that is commonplace in the corporate world but not precisely defined, Delasalle argued.

"When we say 'net-zero,' it implies you have some emissions and you compensate by carbon removals," she said. "In reality, we need most sectors to be really, really, really close to pure zero, with a limited role for carbon removals."

The use of greenwashing, where companies use misleading language to make their activities sound greener than they are, is rare among corporates nowadays, given the demonstrable impact of climate change on many businesses, Delasalle said. As such, most corporates will welcome the enhanced clarity, and it will also help financial institutions trying to compare businesses within the same sector, she said.

"Ensuring investments and engagements are supporting true climate-alignment at companies has been almost impossible until now," Michael Hugman, director of climate finance at the Children's Investment Fund Foundation, said about the standard launched by the Science Based Targets initiative. "There has been no way of knowing which net-zero targets are credible."