How can data drive Net-Zero commitments?
This week is dominated by two themes at COP27: finance, and net-zero commitments. This blog looks at what has happened so far, with regards to ESG data and how the requirements to managing data might be on the brink of change. This quick-read summarises the evolving landscape of how climate data is being used to drive measurable action against climate change from enterprises.
A global climate data portal
On Tuesday, the 8th of November 2022, Emmanuel Macron (President of France) and Michael Bloomberg (UN Special Envoy for Climate Ambition and Solutions) said that they have been working to improve the efforts of climate data and transparency, announcing a new ‘Net-Zero Public Data Utility’. This open database will make data comparable andconsistent. It will be completely free of charge, and available for anyone (individual or investor) to access, enabling them to hold companies directly accountable and help iron out any greenwashing.
There is no denying that many companies have been hiding behind net-zero pledges. Having net-zero data openly available will give individuals insights into corporations that may not have been publicly available before. Making this knowledge available will make net-zero commitments feel more tangible to many people, and with increasingly environmentally aware consumers companies will have no choice but to tighten up their commitments if they are not on track – or face public scrutiny.
Data is the only tool that can help institutions reach net-zero – Michael Bloomberg (COP27 speech)
With an official ‘Chief of Accountability’ already in place, there is set to be a pilot of this global net-zero data tracker in place before COP28 – ready for data to be inputted and utilized thereafter. This is a stepping stone to move into real action and implementation, but will it single-handedly be enough?
Tightening up on Net-Zero claims
On Wednesday 9th November, the United Nations (UN) published a report to harden net-zero claims. The states that promises from financial institutions, big corporations, and cities to achieving net-zero is ‘nothing more than greenwashing’ – which does not come as a surprise given that all current commitments and pledges in place leave us on track to reaching a rise of 2.8 ° C by the turn of the century (source: Emissions Gap Report 2022).
The report, titled ‘Integrity Matters: Net-Zero Commitments by Businesses, Financial Institutions, Cities and Regions’ includes a set of recommendations for companies and non-state actors to follow when implementing net-zero strategies. In summary, these guidelines conclude that:
- Net-zero claims must be disregarded if the organisation has ties to fossil fuels or deforestation
- Carbon credits cannot be used to offset any emissions in a net zero strategy
- We must reduce outright carbon emissions, by focusing on decommissioning existing fossil fuel assets
- We must also refuse to invest in any new fossil fuel assets
At the moment, most of the net-zero information that is out there is limited in depth, with progress often being hidden or misconstrued. Amongst the recommendation to increase transparency and accountability, the report states that all financial and non-financial businesses should seek independent evaluation on their annual reporting, metrics and targets. Although a very clear guide, the report is just that – with no sanctions in place for failure to comply. Nevertheless, it’s a positive spur on to reaching the 1.5 ° C pathway, and perhaps coupled with the Net-Zero Public Utility Data could bridge the gap in disclosing data.
It’s clearer than ever that we can’t rely on voluntary initiatives alone – governments should step up with robust regulation to ensure companies are taking meaningful, rapid action to get us to a 1.5c world. – Xavier Learn, ShareAction.org (COP27 speech)
This is a common statement in the climate change conversation… it’s easy to point the finger to those in power but at this stage, there is no other option other than collective action. In his opening speech at COP27, Rishi Sunak shared how he feels that there is hope, if we [nations] can come together on this common cause.
The future of disclosing ESG data
It’s clear we are on the cusp of a significant shift in data disclosing requirements. When announcing the Net-Zero Public Data Utility, Michael Bloomberg stressed that most data out there is standardized, if not already lying dormant, and we still have very little data across the globe about the emissions that companies are responsible for. Which does raise the question as to how we have come this far, with an abundance of net-zero claims, and so little data on how to create and implement a solid net-zero strategy effectively…
If enough traction is taken, there is a potential that the report could become a legal standard in the future. Having recommendations like this enshrined into a set of universal standards could provide solid ammunition for legal action to be taken against lofty net-zero commitments (which is a first of its kind). Whether the practicalities of implementing the same standards across varying nations could be cause for concern, but as this year’s COP slogan states – we must work ‘together for implementation’.