Net zero targets are a priority for the world’s 10 biggest public companies but the world’s 10 biggest private firms have no net zero targets.
Net zero targets are vital in order to tackle climate change and emission-cutting plans of major publicly-listed companies have received an increasing amount of attention. Much of this focuses on companies’ targets for net zero emissions which is now the dominant framing that many entities, corporate and public sector, use for decarbonisation pledges and plans.
Private companies, accountable only to their owners, and with less regulatory scrutiny and oversight, make up a large share of the world economy: the aggregate annual revenue of the 100 largest private companies in the world amounts to over $4 trillion, almost five per cent of the global economy.
A new report highlights the world’s biggest private companies and how their pledges and plans for net zero compare to their publicly-listed counterparts. The comparison includes both the existence and robustness of a net zero policy: for example, whether the company has set interim targets; published a plan outlining how it will reach net zero; committed to report its progress annually and is clear about the scopes of emissions contained in its target, and planned use of offsets.
Data on the world’s biggest 100 publicly-listed companies was drawn from the Net Zero Tracker database and a list of the biggest 100 private companies and applied the same criteria to their targets, where they exist, that we use in the Tracker.
On almost all net zero quantity and quality metrics we investigated, the report found that private companies are trailing their public counterparts in setting sustainability targets.
Less than half as many have set net zero policies (32 of the top 100 private firms compared with 69 of the top 100 publicly-listed companies). Of those that have a net zero strategy, only 13 per cent have published a plan to reach it, versus 73 per cent of their publicly-listed counterparts. The private companies that have a net zero policy are less likely to include Scope 3 emissions within it, are less likely to have set interim targets, and give less clarity on their planned use of offsets.
The situation is even more concerning when considered in the context of other findings by the Net Zero Tracker and others showing that overall, while corporate target-setting continues at speed the targets of publicly-listed companies themselves show insufficient rigour and integrity. Considered collectively, the net zero performance of major private companies in this report is seriously deficient compared against a benchmark that is itself full of shortcomings.
In 2014 researcher Richard Heede found that over 60 per cent of cumulative global greenhouse gas emissions could be attributed to just 90 global ‘carbon majors’. More recently, a CDP analysis revealed that since 1988, 70 per cent of global emissions can be traced to just 100 firms.
The lack of integrity of the largest private firms’ net zero pledges is a $4.3 trillion blind spot that is likely to gain much greater interest in the coming years. Constituencies that take an active interest in the decarbonisation plans of publicly-listed companies are likely to bring more scrutiny to bear on their privately-held counterparts.