More companies moving to adopt decarbonization targets

, Senior Global Correspondent
Source: Climate Impact Partners • References to alignment with climate science refers to a standard developed by the Science Based Targets Initiative (SBTi). Companies with SBTi targets must have a formal plan for reducing greenhouse gas emissions. Science-aligned target includes companies that either have an SBTi-aligned target or have committed to creating such a target.

More companies are setting goals to reduce their greenhouse gas emissions even as they puzzle over the best way to reach them, according to an analysis of the largest global businesses by Climate Impact Partners, which advises clients on decarbonization plans and carbon credits.

The share of corporations among the Fortune Global 500 with some sort of goal to reduce their emissions rose to 45% this year, up from 39% last year.

The trend was most pronounced in the United States and Canada, despite growing politicization around corporate support for environmental, social and governance issues, commonly known as ESG programs. About 79% of North American companies have announced some kind of net-zero target as of this year’s survey, up from 74% last year.

“More clearly than ever it feels like corporates are saying, ‘okay, we’ve got to do something,” said Sheri Hickok, chief executive of Climate Impact Partners.

Companies are likely responding to a mix of motivations, from shareholder and employee concerns about the need to reduce emissions to regulations in certain regions, including California.

The survey was conducted in September 2024, before the U.S. elections in which Republican Donald Trump won the White House and fellow Republicans took complete control of Congress, developments that are likely to diminish any federal requirements on companies and climate change.

Still, companies appear to be increasingly wrangling with what exactly these commitments, which can be expensive and require significant changes in operations, should entail. Rather than adopting the most common standardized framework for reducing emissions, known as the Science Based Targets Initiative (SBTi), many companies are simply setting out their own goals, some without explaining how exactly they plan to meet them.

Companies can join SBTi by setting a voluntary target, then developing a plan that conforms to the group’s decarbonization guidelines within two years. These rules involve setting mid-range progress goals and focusing efforts primarily on actually reducing emissions rather than simply off-setting them with carbon credits.

Outside a framework such as SBTi, evaluating a company’s plan for meeting a net-zero goal can be more difficult. And some companies may have a goal but no formal plan to reach it.

While still the gold standard of the industry, SBTi has recently been embroiled in a debate over whether, how and when carbon credits can be used to offset emissions from some business operations. Companies adopting targets outside the group’s guidelines could be waiting for the debate to be settle—or moving away from the standard.