Reports > Management

Net zero, Implementation is more important than declaration, and providing a roadmap rather than an agenda is crucial.

2023.07.12 Bae-Seong Kwack

Bae-Seong Kwack

#Hashtag

#carbon neutral #ESG #net zero
Despite many global companies declaring their commitment to achieving net zero, the feasibility of their net zero realization has been ambiguous. However, as disclosure requirements regarding corporate net zero performance gradually standardize, regulatory bodies and investors are demanding specific roadmaps to verify companies' progress toward net zero. Let's examine the current status and future response strategies of companies regarding this matter.
Table of Contents

  • 1. The Gap between Net Zero Declarations and Implementation

  • 2. Issues Regarding the Feasibility of Net Zero Realization 3. Corporate Progress in Implementation

  • 3. Corporate Progress in Implementation

  • 4. Pressures for Net Zero Implementation

  • 5. Implications

Executive Summary

  • Despite the growing consensus on achieving net zero, doubts have been raised about its feasibility.

    • Globally, the number of companies declaring their intent to achieve Net Zero is increasing, but skepticism regarding feasibility is also on the rise.

    • There are opinions suggesting that with the current technology and investment scale, there are limitations to achieving net zero outcomes by the targeted deadlines.

  • It's challenging for companies to maintain consistent responses amid low feasibility and high societal demands.

    • While actively promoting net zero activities on the front end, some companies engage in lobbying activities against strengthened regulations related to net zero behind the scenes.

    • Among companies declaring net zero, instances of omitting net zero-related information or disclosing ambiguous information, leading to suspicions of greenwashing, have arisen.

  • Meanwhile, regulatory authorities and investors are increasingly pressuring companies for net zero implementation.

    • (Legal Sanctions) Pressure for net zero implementation has escalated from recommendation to enforcement levels to curb greenwashing.

    • (Disclosure Obligation) Governments and financial regulatory authorities in various countries are establishing standardized and objective global ESG disclosure standards, requesting companies to disclose their net zero implementation status.

    • (Demand for Roadmaps) Global investors demand substantial roadmaps and specific performance disclosures for achieving net zero to manage investment risks effectively.

  • Companies declaring net zero need to present roadmaps based on achievable goals and methodologies.

    • Mere declarative announcements of net zero are no longer meaningful; instead, step-by-step methodologies based on scientific evidence and short-term goals should be provided to prevent the risks of greenwashing.

    • Transparent disclosure of climate-related information based on accounting standards is necessary to comply with accounting requirements and ensure that step-by-step net zero implementation processes are reflected in corporate value.

  • Concurrently with presenting roadmaps, integration of net zero strategies across the entire management spectrum is essential.

    • (Strategy/Investment) Include net zero risk assessments in the investment decision-making process and secure realistic interim goals and business models for achieving net zero.

    • (Internal Controls) Standardized data-driven management is crucial for smooth internal and external communication related to net zero.

    • (IR/PR/GR) Drive external communications to ensure that net zero-related information is positively reflected in corporate valuation and to avoid the disadvantages of greenwashing suspicions.

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