By November 2021, when the 26th United Nations Climate Change Conference (COP26) takes place in Glasgow, governments around the world will need plans to drastically reduce their greenhouse gas (GHG) emissions. More than 125 countries, including the global giants, have set net-zero targets. Roughly 25% of Fortune 500 companies have also committed, including global leaders like Amazon, Apple, Microsoft, Shell and BP. Five hundred companies have set science-based targets consistent with the Science Based Targets initiative (SBTi), and another 500 are in the process of doing so.1 In addition, more than 1,200 major companies support the Task Force for Climate-related Financial Disclosures (TCFD),2 and a number of governments around the world are moving to make TCFD-quality disclosure mandatory, including the U.K. and European Union (EU).
The pressure on governments and companies is growing, compelling action. Beyond providing forward-looking disclosure, investors are demanding that major companies present credible plans for how they will manage¡ªand mitigate¡ªtheir emissions going forward. And investors themselves increasingly will be judged on how well they are positioned for the net-zero transition.
Two global transitions are necessary to achieve net zero: a clean energy transition and a transformation of businesses across the economy. These require a rapid move away from fossil fuels, which produce carbon dioxide (CO2) and other greenhouse gases (such as methane), to non-emitting sources of energy, such as solar, wind and hydroelectric power. They also require a decarbonization of existing production processes, the electrification of industries and the commercialization of carbon-capture technologies.