ABSTRACT
Since the 2015 Paris Agreement, a growing number of states and firms have adopted targets to reach net zero emissions. These pledges vary significantly both in the timing of adoption and in robustness – measured by whether they adopt procedural best practices. We introduce a novel time-series dataset measuring the uptake and robustness of net zero targets of states and the world’s largest listed firms between 2015 and 2023. The new data allow us to identify patterns that speak to a key debate in the literature: what explains the rapid uptake of net zero targets by firms and countries? Descriptive inference yields several insights. First, the timing of net zero adoption by both states and firms strongly tracks international mobilization efforts, highlighting the importance of the United Nations (UN) process for target setting. Second, on average, firms set targets before countries. Third, there is an increase in some best practices for companies, such as setting interim targets and including Scope three emissions in targets, alongside a lack of progress in others, such as safeguards on the use of offsetting. Importantly, we do not find significant variation in timing or robustness of net zero pledges across firms in different sectors. For countries, early adopters tend to have more robust targets from the beginning than late adopters, suggesting the latter may be adopting more symbolic targets. In sum, our results show the rapid growth of the net zero wave, but also its limits in driving robust targets.
Key policy insights
- The timing of the adoption of net zero targets by both firms and countries closely mirrors the multilateral negotiations of the Paris Agreement, highlighting the importance of international organizations for target setting.
- While the adoption of some best practices grows over time, including setting interim targets and including all emissions, others, such as transparent use of offsetting, do not.
- Additional focus on these areas is therefore needed, for example: clear guidance on the use of offsets in target-setting frameworks.
- The UN and non-governmental organizations should use the requirements of the Paris Agreement to increase ambition to further define best practices for net zero, and incentivize states to submit more robust pledges, moving beyond targets to specific plans for how to operationalize and implement them.