Setting a Net-Zero Target
Setting interim emissions-reduction targets
5 minute read The target date of many corporate climate targets is nearly 30 years away. Owners and managers of assets, companies and other capital-markets participants are mapping out interim targets for cutting carbon emissions across portfolios.
- Stress testing net-zero transition scenarios
- An interactive tool for visualizing net-zero alignment
- Using scenario analysis for climate change
- Making sense of greenhouse gas emissions types
- Untangling corporate decarbonization targets
- Setting interim emissions-reduction targets
- A checklist for climate-aligned investment portfolios
Interim targets can help organizations calibrate the GHG emissions they reduce as the transition to net-zero unfolds. The TCFD recommends that organizations that set medium- and long-term targets should have five- or 10-year targets as well. That aligns with the Paris Agreement, which requires countries that have ratified it to submit emissions-reduction plans every five years.
As part of their goal of keeping global warming at 1.5°C this century, members of the Net-Zero Asset Owner Alliance and Net Zero Asset Managers Initiative have committed to publish interim emissions-reduction targets for their holdings every five years. The Net-Zero Asset Owner Alliance, for example, has set out a four-part target-setting structure that comprises:
- Engagement targets, with a focus on the highest-emitting companies in their portfolio
- Sector targets, with a near-term priority on emissions-intensive companies in oil and gas, utilities, shipping and transportation
- Sub-portfolio targets, including the goal of reducing emissions by between 16% and 29% on publicly listed companies and corporate debt by 2025
- Financing transition targets, including reporting their progress on carbon-negative investments
Members of both groups have committed to set interim targets that take account of Scope 1 and 2 emissions for their holdings, together with Scope 3 emissions from portfolios, to the extent possible.
