UNEP urges boldest ever NDCs for 2025: can corporations move the needle on achieving national climate goals?

Last week, the United Nations Environment Programme (UNEP) launched their fifteenth Emissions Gap Report 2024: No more hot air … please! An urgent call for action for governments to be more ambitious, the report focuses on what countries need to commit to in their next Nationally Determined Contributions (NDCs), to reach their 2035 mitigation targets.

As set out by the Paris Agreement, we need to work together to limit global warming to well below 2°C. Governments cannot achieve this alone. We need strong multi-sectoral collaboration and aggressive private sector participation, to help national governments stay on track and hit their mitigation targets. 

In this article, we will share key takeaways from two reports - the UNEP Emissions Gap Report and the We Mean Business Coalition Report - offering targeted insights for corporations, seen as essential partners to governments, in realizing the mitigation potential of ambitious NDCs.

Key takeaways from the UNEP Emissions Gap Report

1. Increase in GHG emissions from 2022 levels: Global greenhouse gas emissions set a new record of 57.1 GtCO2e in 2023, a 1.3 per cent increase from 2022 levels
   
   
2. Disparities in emissions among regions is significant: GHG emissions across the G20 members accounts for 77 per cent of global emissions. The top six GHG emitters produce 63% of global emissions, while least developed countries contribute just 3%.

3. Lack of ambition and action since the initial NDCs: While 90% of Paris Agreement parties have updated their NDCs, progress has stalled since COP 26, with only one country strengthening targets after COP 28. Under current policies, global emissions are set to exceed 2030 targets, and most G20 countries are off track to meet their NDCs.

4. Concerning emissions trajectories of the G20 members towards net zero: By June 2024, 101 parties, covering 82% of global GHG emissions, had set net-zero pledges but with limited progress on action. Seven G20 members have yet to peak emissions, considered a  prerequisite to achieving net zero, while ten others need to accelerate decarbonization post-2030 to meet their net-zero goals.
   
   
5. Current NDCs fall radically short of reductions needed to limit warming to 1.5°C or 2°C: The full implementation of unconditional and conditional NDCs reduces expected emissions in 2030 by 4 and 10 per cent, respectively, compared with 2019 levels, whereas a 28 per cent reduction is needed for 2030 emissions to be aligned with 2°C and a 42 per cent reduction for 1.5°C.

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6. Lost time since 2020 raises warming projections, making it harder to close the emissions gap: The emissions gap assessment shows that delayed action and rising emissions since 2020 have shrunk the remaining carbon budget, increasing the risk of temperature overshoot and severe, possibly irreversible climate impacts. Bridging this gap by 2030 will be increasingly challenging without immediate reductions.
   
   
7. Immediate action is crucial and our only hope of limiting warming: Continuing on the current policy pathway could result in up to 3.1°C warming, while fully implementing unconditional and conditional NDCs would lower this to 2.8°C and 2.6°C, respectively. There is virtually no chance of limiting warming to 1.5°C.
   
   
8. G20 members, excluding the African Union, must go further and faster to close the emissions gap : Current NDC targets for the collective G20 countries are neither aligned with cost-effective nor with fair-share pathways consistent with the temperature goal of the Paris Agreement.
   
   
9. Emission reduction potentials for 2030 and 2035 hinge on boosting policies, support, and financing aggressively: Mitigation potential below US$200/tCO2e can bridge the emissions gap for 2030 and 2035, with significant contributions from solar, wind, and forestry practices. Achieving these reductions will require unprecedented global policy action, a sixfold increase in mitigation investments, and a focus on sustainable development, particularly in emerging markets and developing economies.

Should non-state actors step up to help unlock mitigation potential?

While governments have the lion's share of responsibility in setting and achieving Nationally Determined Contributions (NDCs), the scale of change needed across sectors, to meet targets that are more ambitious than ever, requires sweeping efforts that go beyond state actors. 

In September this year, the We Mean Business Coalition (WMBC) released their “Time to deliver: Business call to action for ambitious and investible NDCs” report. The coalition of 7 nonprofits dedicated to influencing corporate climate action, makes a strong case for governments and businesses to work together in achieving collective emissions reductions.

The report emphasizes that the private sector’s ability to invest capital and drive innovation is going to play a key role in closing the gap between current national commitments and the desired impact.

Large corporations hold the power to start industry-wide trends, shift supply chains, and mobilize resources at a speed and scale that can complement and amplify government actions. By stepping up, companies can not only contribute to national goals, but also future-proof their businesses in an evolving regulatory and market landscape.

Gap between ability and achievements: corporates need to pull their weight

Unfortunately, there is a big gap between what corporations can do and what they are currently doing. Earlier this month, we launched our annual CO2 AI x BCG carbon survey, which found that corporations are severely lagging in their efforts to decarbonize. 

Out of the 2,000 companies surveyed, collectively responsible for about 45% of global greenhouse gas (GHG) emissions:

• only 9% of companies reported comprehensively on their Scope 1, 2, and 3 emissions
• only 11% have successfully reduced their emissions in line with their ambitions.
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The survey also found that 25% of companies reported annual decarbonization benefits worth at least 7%+ of sales. This equates to about $200 million in net benefits after investments. Therefore, corporate progress on decarbonization can not only help governments achieve their NDCs, but also drive significant cost savings for companies across industries. 

There is a light at the end of the tunnel - measure, set targets and operationalize 

The findings of the report and the carbon survey are disappointing, but there are some positive trends as well. We are already seeing aggressive corporate action along some aspects of target setting and reductions, which can pave the way forward for others to follow. 

Many companies, such as Reckitt, which has set publicly available science-based targets, are setting the right example. At CO2 AI, we are helping our customers, some of the largest corporations in the world, adopt a 3-step process. We are helping our customers measure their Corporate Climate Footprint (CCF) and Product Level Footprint (PEF) at scale, set SBTIs and define a realistic roadmap to reduction and finally, engage their suppliers across the value chain to have a real impact.

“To deliver, we would need a whole-of-government approach, measures that maximize socioeconomic and environmental co-benefits while reducing trade-offs, and a minimum sixfold increase in mitigation investment – backed by reform of the global financial architecture and strong private-sector action.”

- Inger Andersen, Executive Director of the UN Environment Programme (UNEP)

Private sector action and investment will be a key factor in ensuring NDCs are implemented timely. Now that we know that our current trajectory and even the best case scenario, will not be ambitious enough to achieve the 1.5°C global goals, governments and businesses need to work together to help secure our collective fate . 

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