Only 20% of Companies in G20 Countries Have Science-Based Decarbonization Plans

Only 20% of companies in G20 countries have plans to reduce their carbon emissions in line with climate science.

That’s the conclusion of a report published ahead of the G20 summit taking place this week by the Science Based Targets initiative (SBTi). On the one hand, SBTi co-founder Alberto Carrillo Pineda tells Treehugger, that 20% figure shows important progress. But there’s still a long way to go.

“Of course the negative side is the fact that we are still missing the other 80 percent that need to align their climate targets to science,” he says.

Science Based Targets 

SBTi was founded in 2014 and launched its first campaign in 2015, six months before the adoption of the Paris climate agreement. The initiative—formed by a coalition between CDP, the United Nations Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF)—has set itself the goal of driving businesses and financial institutions to set science-based emissions-reduction targets. 

“We are defining science-based targets as targets that have the ambition or a pace of decarbonization that is consistent with the pace of decarbonization needed to limit warming to 1.5 degrees or well below two degrees,” Pineda explains. 

To be consistent with limiting emissions to 2.7 degrees Fahrenheit (1.5 degrees Celsius) above pre-industrial levels, a company must commit to halving emissions by 2030, Pineda says. To be consistent with limiting emissions to "well below" two degrees, they must pledge to reduce them a quarter by that date. 

SBTi’s most recent analysis looked specifically at the commitments coming out of G20 countries, updating a report published in June that focused only on G7 countries.

“This new research shows that more than 4,200 G20 companies have set climate targets, but just 20% are science-based,” Member of the SBTi Executive Leadership team and Senior Manager at UN Global Compact Heidi Huusko writes in the report. 

Further breaking it down, 2,999 G7 companies have disclosed targets to CDP, which is the non-profit that runs the global disclosure system for environmental impacts. However, only 25% of those targets are science-based. For the remaining G13 countries, 1,216 companies have set targets, but only 6% of these are sufficient to limit warming to 2.7 degrees Fahrenheit (1.5 degrees Celsius).

The countries where the greatest share of companies have set sufficiently ambitious targets are

1. United Kingdom: 41% 
2. France: 33%
3. Australia: 30%
4. India: 24%
5. Germany: 21%

On the opposite end of the spectrum, zero percent of companies in Argentina, Indonesia, Russia, Saudi Arabia, or South Korea have set science-based targets. The U.S. comes in slightly below the average for G20 countries overall, with 19% of companies setting science-based targets. 

Fair Share

The report noted that companies in high-emitting countries or industries need to step up. Indonesia, Russia, and Saudi Arabia are among the heaviest emitters in the world, but none of their companies have set appropriate targets. Further, in G7 countries, 10% of companies are responsible for 48% of emissions. 

The number of companies setting science-based targets is on the rise, increasing 27% in G20 countries between June and August of 2021. Despite this, the amount of greenhouse gas emissions covered by these targets in G7 countries has not significantly increased since April, and this is because the heaviest emitting companies are not joining in. 

“It is key of course to put particular pressure and incentive on those companies because those are the ones that have the largest impact,” Pineda says. 

At the same time, Pineda says it is important for businesses in G7 countries especially to do their part for two reasons: 

1. They have already contributed more to global emissions than companies and countries in the developing world.
2. There is more institutional support in these countries to facilitate ambitious commitments.

“It’s almost unquestionable that companies in G7 countries should be already setting science-based targets,” he says.

Unmissable Opportunities  

While SBTi focuses on private actors, it also hopes the timing of the report will influence national policymakers.

“The G20 Summit in October and COP26 in November represent crucial milestones on the road towards 1.5°C, and are unmissable opportunities for governments to secure a net-zero future for humanity and ensure that the goals of the Paris Agreement remain in reach,” Huusko writes.

So far, currently announced nationally determined contributions (NDCs) put the world on track for 4.9 degrees Fahrenheit (2.7 degrees Celsius) of warming by 2100. 

“That is well above the goals of the Paris climate agreement and would lead to catastrophic changes in the Earth’s climate,” the UN Environment Programme warns.

SBTi hopes to encourage G20 policymakers to set more ambitious NDCs by showing them that 20% of their economy is already on board. 

“The work that we do in the SBTi is on the one hand to mobilize companies to close the ambition gap that we had from countries but on the other hand to give confidence to policy makers that there’s already a significant number of companies in those countries that are taking science-based climate action and they need to consider this in their own country targets,” Pineda says. 

He also hopes the momentum behind science-based targets will encourage more companies to set their own, and he says this is ultimately good for business. 

“The transition to net zero is unavoidable so we really want to see as many companies as possible to follow suit and to protect their company,” he says.