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Number of companies pursuing science-based targets has nearly quadrupled since 2020
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US trails Europe with just 19% of targets coming from the Americas versus 57% from Europe
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New research from Bain & Company shows that 31% of businesses worldwide missed Scope 1 & 2 decarbonization targets with 2020 deadlines
Almost a third of businesses globally failed to deliver against decarbonization targets set for 2020, according to new research from Bain & Company. Bain’s analysis of data from CDP, a non-profit that runs the world’s largest environmental disclosure system, shows that 31% of businesses who set and published scope 1 and 2 absolute emissions reduction targets* due in 2020 did not meet them. More than a quarter missed these targets by a substantial margin—below 80% of their target.
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The research, which is being released at the World Economic Forum this week, reveals the challenges companies face in living up to the growing number of net zero commitments being made to investors, regulators and the public. According to Bain & Company, many companies are struggling to match ambitious pledges, which also include more complex-to-tackle scope 3 emissions, with effective action. Leaders sometimes feel overwhelmed by the scale of the challenge.
According to the research, a post COP26 surge in environmental target setting has driven a fourfold increase in the number of science-based targets being submitted to the CDP. Bain & Company found that the number of organizations who have committed to science-based targets has almost quadrupled from 775 in 2020 to 2843 in April 2022. However, there remains a stark global divide. The majority (57%) of science-based commitments to date come from businesses in EMEA, with 19% coming from the Americas and 24% coming from APAC.
“2021 was a year of ambition setting catalysed by COP26. In 2022 the focus is shifting to delivery against the ambition and monetizing low carbon leadership with customers in order to be able to reinvest in the topic” said Torsten Lichtenau, Senior Partner leading Bain & Company’s global Carbon Transition Impact Area.
“CEOs have been bold in setting ambitious targets, while the roadmap to full delivery is still unclear and highly challenging,” said Jenny Davis-Peccoud, co-leader of Bain & Company’s Sustainability & Responsibility practice. “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.”
Bain & Company’s new research outlines five steps companies can take to bridge the gap between ambition and action.
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- Put a premium on strategic adaptability: Companies need to be aware of the direction of travel, notably in the regulation and technology spaces to inform the living strategy.
- Proactively address investor dissonance: Executives need to strengthen the investor dialogue, focusing on strategic clarity to address the company’s green ambition and its growth and return aspiration.
- Decarbonize customer-back: Companies should start decarbonization with the customer in mind and work backward across offerings, operations and the supply chain.
- Collaborate where it matters: The carbon transition must be tackled by engaging the wider ecosystem of customers, suppliers, peers, governments and civil society.
- Create “net zero heroes” in middle management: Organizations must upskill employees to create an effective green middle management by being clear on what decisions to make and how to resolve trade-offs when they occur.
