A Distinctly Private Pursuit: Not going net zero

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Weighted by annual revenue, net zero targets now cover nearly 80% of the world’s largest 2,000 publicly listed companies, up from less than 20% in 2020. The integrity and clarity of these targets are weak, but voluntary target-setting at the publicly listed level continues to reach new heights.

The picture at the private company level is starkly different. As the net zero world for corporates increasingly moves from being defined by voluntary efforts to mandatory rules, privately companies continue to trail behind their publicly listed peers by around half on net zero target-setting. They also trail behind on the integrity of their strategies to achieve these targets.

In this analysis, we compare the net zero targets and other mitigation efforts of the world’s largest 100 private companies with the world’s largest 100 public companies.

In terms of net zero target-setting, we found that:

Two-fifths (40) of the largest private companies have set net zero targets, compared with seven-tenths (70) of the world’s largest public companies.
More than half (52) of the world’s largest private companies have set net zero or emission reduction targets. This compares with 82 of the world’s largest public companies.
The combined annual revenue of private companies with net zero targets is $2.2 trillion. The combined revenue of private companies without any mitigation measures is $1.7 trillion. For those without net zero targets, it is $2.8 trillion.
Only four of the world's largest 10 private companies have set net zero targets, compared with nine of the world's 10 largest public companies.

In terms of the quality of the 40 net zero targets, we found:

Only eight (20%) private companies have published plans to deliver on their pledges, compared with 56 (80%) of the 70 public companies with net zero targets.
Only two (5%) — IKEA (Netherlands) and Bechtel (US) — rule out the use of carbon credits to achieve their net zero goals.

From a geographic perspective across all 100 private companies:

Of the 28 headquartered in the EU and the UK, 21 (75%) have net zero targets. But only a small minority have published plans to achieve these targets.
Of the 50 headquartered in the US, only 11 (22%) have net zero targets, substantially less (in absolute and relative terms) than US-based public companies, where 28 of 43 (65%) have net zero targets.
Of the 16 headquartered in China, four have net zero targets, up from just one in 2022.

In the eighteen months since we last looked into private companies' net zero and emission reduction efforts, the quantity and quality of targets have barely budged.

Risky business

This report shows that dozens of private companies in the largest markets in the world — the EU, the US and China — still do not have net zero or emission reduction targets. As the regulatory landscape develops around them, staying silent on net zero increases transition risks for themselves, and undermines collective emission-cutting efforts by governments and other non-state entities.

In the EU, for example, two of the 23 assessed EU-based private companies have no emission reduction targets whatsoever, raising questions about whether they are ready for the effects of the mandatory Corporate Sustainability Reporting Directive (CSRD) — which creates a ‘duty to disclose’ — and the mandatory Corporate Sustainability Due Diligence Directive (CSDDD) — which will, once effective, create a ‘duty to act.' They are:

E.Leclerc (FRA)
Mercadona (ESP)

For private companies, the findings of this report underscore the mounting transition risks faced by those neglecting to address their emissions and/or ignoring the regulatory landscape that is increasingly seeking to mandate climate action.

For policymakers, this report's findings reinforce that bringing private companies into the shared sunlight with their public counterparts and creating a ‘level playing field’ on regulations are prerequisites for bolder corporate action on climate change.