To meet net-zero standards, non-state actors must stop investing in fossil fuels, investing in unreliable carbon credits, and undermining governmental regulations, according to new guidance from the United Nations.
The UN High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities published the guidance that defines “what it means to be net-zero and net-zero aligned.” It targets businesses, financial institutions, and local regions.
In a separate report, the Sierra Club’s Fossil-Free Finance campaign shows the six largest banks in the United States are falling short of what is needed to reach international net-zero goals, in part because of continued financing of fossil fuels.
As COP27 in Egypt ramps up, there are numerous points outlined in the UN report detailing how organizations can achieve and support net-zero goals. The guidance says organizations must focus on reducing Scope 1, 2, and 3 emissions throughout their entire operations and not focus simply on reducing emissions intensity. It also lists 10 specific recommendations, including setting net-zero targets, increasing renewable energy, and increasing accountability.
There is a significant focus on ending the support of and investment in fossil fuels in the guidance. It calls for the immediate end of financial support for companies expanding coal infrastructure, power plants, and mines, as well as a commitment to end financial and advisory services to the entire coal value chain by 2030 in OECD countries and 2040 in non-OECD countries.
It also says there needs to be an end to financial support for new oil and gas fields, expansion of oil and gas reserves, and oil and gas production. The report says fossil fuels account for more than three-quarters of global greenhouse gas emissions.
“Non-state actors cannot claim to be net zero while continuing to build or invest in new fossil fuel supply,” the report says.
Ahead of COP27, a group of scientists also targeted support for fossil fuels. It sent a letter to the communications company handling public relations for the climate conference saying its support for oil and gas companies is incompatible with its COP27 role.
The UN guidance also says organizations should not lobby against climate action and regulations either directly or through trade organizations. It also seeks to address greenwashing by moving from voluntary initiatives to regulated requirements for net zero.
Greenwashing has become a growing concern as sustainability targets gain traction. Lawsuits challenging sustainability claims are increasing, for example, such as a recent filing against Evian.
The UN says non-state actors should not rely on low-quality or unverifiable carbon credits, either, and instead focus on cutting their own emissions. It does say once a standardized carbon market is established, it will be a good source of financing sustainability efforts internationally, including with decarbonizing underdeveloped regions.
The Sierra Club report calls on financial institutions to do much of the same as the UN guidance. It says banks need to disclose their emissions data, set verifiable and science-based targets, and set an absolute emissions reduction target for the oil and gas industry by 2030. It also says banks need to end financial support for further fossil fuel production.
“With the majority of the global financial sector falling behind on their own climate targets, it is paramount that financial institutions follow this guidance and align their own plans with the recommendations of the UN Expert Group,” Adele Shraiman, a representative with the Sierra Club’s Fossil Free Finance Campaign.