A new report finds that three big organisations are leading the way when it comes to “real zero” commitments – meaning these companies are not relying on carbon offsets when it comes to decarbonisation and phasing out of fossil fuels.
The report Real Zero Leadership commissioned by not for profit research and advocacy group Climate Integrity published findings, by the Institute for Sustainable Futures at the University of Technology Sydney, found that Fortescue, IKEA and Lendlease were the leaders when it comes to delivering “real zero” commitments.
Climate Integrity director, Claire Snyder said that the organisation’s research had found that decarbonisation strategies from “market leading” companies are shifting from “net zero” to “real zero”. This prompted the organisation to commission a report identifying the top leaders in decarbonisation actions.
The report adds that while “none of these companies fully align with every aspect of UN HLEG (igh-Level Expert Group) recommendations…companies were selected on the basis of positive practice and the overall level of alignment is relatively high.” It also adds that “their targets are ambitious” and their actions have exceeded “the requirements of science aligned decarbonisation pathways.”
The United Nations High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities (UN HLEG) was established in 2022 by United Nations Secretary-General António Guterres to develop strong and clear standards for net-zero emission pledges by non-state entities – including businesses, investors, cities, and regions.
Guterres said he established the group because there should be “zero tolerance for net zero greenwashing”. Its work was finalised, and the mandate was launched at COP27 in 2022.
According to the real zero report, the three leaders of different sectors shared four common positive practices:
- commitment to decarbonise without reliance on offsets and prioritise absolute emissions reductions in value chains
- efforts to collaborate and support sectoral reform through leadership and information sharing on achieving “real zero”
- strong internal leadership and commitment to real decarbonisation outcomes
- commitment to phase out fossil fuel, including in the hard to abate mining and construction
Snyder said that her organisation wanted the three case studies to show that “not only is it possible, it is already happening and it’s good for business” and these approaches are “faster, more accountable and ambitious than the global norm.”
The organisation stated that net zero was simply not enough, noting that net zero pledges cover 93 per cent of global GDP, yet 2024 saw global average temperatures exceed 1.5 degrees Celsius and fossil fuel emissions increase by 0.8 per cent.
“These companies are demonstrating what can be achieved through strong internal leadership, fostering a culture of commitment to targets, and embedding climate and emissions reduction throughout the entire business,” Snyder said.
“They are setting a new standard for credible and rapid progress in decarbonising at the pace that’s urgently needed.”
Meanwhile, a previous study from the organisation found that the net zero pledges of ten prominent Australian companies, including Qantas, Origin, AGL, and Woolworths, were “lagging behind global best practice and largely lack scientific rigour”.
What they’re doing – a snapshot
Lendlease
According to the report, Developer Lendlease has sourced 65 per cent of its global electricity use from renewable sources in FY24, with a target of achieving 100 per cent renewable energy by 2030. The company currently operates across Australia, Asia, the Americas, and Europe. In May last year it send it would bring its international property development to a close and sell its overseas construction divisions over the next three years.
The developers aim to achieve “absolute zero carbon” by 2040 for their Scope 1, 2, and 3 emissions within their defined baselines, including FY14 as their Scope 1 and 2 baseline and FY21 as their Scope 3 baseline.
In the meantime, it has also set a net-zero carbon target by 2025. Both targets are aligned with the Paris Agreement mandates and verified by the Science Based Targets Initiative (SBTi) to limit warming to 1.5 degrees Celsius. The targets will also apply to all global operations.
And the target is on track, the company said in its reporting.
Scope 1 and 2 emissions account for only 5 per cent of the company’s total emissions, primarily from construction, whereas Scope 3 accounts for 95 per cent of the total group emissions, with more than 50 per cent of this coming from purchased goods and services.
This includes embodied carbon emissions from building materials such as steel, cement, aluminium and glass.
The developers have also committed to an absolute zero roadmap, which includes phasing out the use of fossil fuels. In 2023, they released a construction guide on how others can also decarbonise fossil fuels from their portfolios.
Lendlease group head of sustainability, Cate Harris, said that “radical decarbonisation is required across the built environment sector and target setting has a critical role to play in driving the scale and pace of transformation.
“The recent breach of the 1.5°C threshold underscores the urgency for decisive and accelerated action, which we want to encourage other companies who are holding back to know – it can and is already being done. And by collaborating on the solutions to the unknown, we can get to a net zero future faster.”
Fortescue
According to the report, Fortescue, the Western Australia-based ASX-listed iron ore mining company, aimsd to have global green technology, metals and energy fully integrated into its business. The company’s mission is to accelerate “commercial decarbonisation of industry, rapidly, profitably and globally”.
Its real zero targets currently apply to its Pilbara iron ore operation, which accounts for approximately 98 per cent of its Scope 2 (location-based) emissions and 86 per cent of its Scope 1 emissions. The company also stopped purchasing voluntary carbon offsets in FY24 for Scope 1 and 2 emissions.
It aims to achieve net zero in Scope 1 and 2 greenhouse gas emissions in Australian iron ore operations by 2030, removing emissions from the use of diesel and gas, purchased power, heavy mining equipment, rail, shipping, and associated infrastructure.
It also remains the only company committed to phasing out fossil fuels in its sector.
Targets also include a 50 per cent reduction in emission intensity for Scope 1 and 3 shipping, as well as a 7.5 per cent reduction in steelmaking by 2030 and a net-zero target for Scope 3 emissions by 2040.
Notably, 94 per cent of its Scope 3 emissions are primarily attributed to the processing of sold iron ores by steelmakers, mostly in China, and this accounts for 96 per cent of the company’s total Scope 1, 2 and 3 emissions.
It has also committed to using 100 per cent renewable energy by 2030.
In committing to real zero, the company has invested in:
- green fuels and electrification to decarbonise its heavy mining equipment, rail, and shipping fleet
- transitioning to using renewable energy for stationary on site power, including through power purchasing
- commercialisation and scale up of green metal technology steelmaking that is key to meeting its Scope 3 emission targets
- ramping up the Iron Bridge magnetite mine
Chief executive of Fortescue Metals, Dino Otranto, said,“Fortescue is seizing these opportunities rather than foisting the problem on the next generation. The fossil fuel era is winding down, and Fortescue intends to be at the forefront of what comes next.
“This recognition is a testament to the work we’re doing to prove that heavy industry can cut fossil fuels – not someday, but right now.”
Ikea
Swedish furniture and household retailers IKEA, along with the largest owner and distributor of IKEA locations, Ingka Group, are both pursuing different SBTi verified targets. The Ingka Group generates 87.8 per cent of retail sales and operates 574 locations in 31 countries, contributing immensely to the Inter IKEA Group’s targets.
The company operates 10 stores in Australia, another six pickup points and three plan and order points.
The retailers have targets to reduce emissions by 50 per cent by FY30 for Scope 1, 2, and 3 emissions, with FY16 as the baseline. Long term targets include “absolute reduction” of at least 90 per cent of Scope 1, 2 and 3 emissions by FY50.
The company said its target will not rely on offsets, and the remaining 10 per cent from its 2050 targets will be neutralised through removing and storing carbon from the atmosphere into IKEA’s supply chain. The climate footprint within its target will cover the entire IKEA supply chain, including production, product transport, retailers as well as product use at home and product end of life.
Scope 1 and 2 emissions currently account for 2 per cent of Inter IKEA’s emissions, and Scope 3 emissions account for 98 per cent, with 63 per cent of this coming from materials used in goods and services.
The company is also committed to phasing out fossil fuels from its value chain, encompassing power generation, transportation, logistics, and materials. Since 2016, the company has reduced emissions by 28 per cent 2016.
IKEA Australia and New Zealand public affairs leader, Lauren Sinfield, said that the company has reduced its operational footprint by 89 per cent since 2016.
“These results show that investing in rapid decarbonisation initiatives and delivering commercial success is absolutely achievable – together.”
“In Australia, we recently completed a large-scale PV solar and battery installation at the Marsden Park Distribution Centre…this project takes onsite renewable power generation to around 70 per cent of energy requirements, which is significant, and with battery storage, capable of supporting the 24-hour operations at the site.”