With net-zero targets popping up around the world at a dizzying pace, Bethany Gorham, senior VP at Orion Energy Partners, says there needs to be transparency and uniformity across all levels of emissions commitments.

Net-zero planners need to set interim targets, indicate which categories of greenhouse gas emissions they will cover, and  publish publicly how they plan to reach their goals, she said during a webinar hosted Tuesday by the NYU School of Professional Studies.

“It’s going to be really important for watching these people actually meet the goals that they’re setting,” she said.

She cited data on net-zero targets gathered by the Energy and Climate Intelligence Unit that show 124 countries, 73 states and regions, 155 cities and 417 companies have made “some form of commitment to net zero.”

In its March assessment of targets from around the world, ECI said that most net-zero commitments are for 2050, but 212 have a 2030 date, and three-quarters of the 2030 dates were made by companies. In addition, most targets are only proposals, and 14% do not identify what their target gases are. Across all sectors, most commitments are unclear on whether they will use carbon offsets to meet their targets. In addition, only 25 nations, 41 states and regions, 65 cities and 210 companies have a published plan, while 115 nations, 35 states and regions, 71 cities and 244 companies have set interim targets.

Michael Cohen, chief U.S. economist at BP, said that he would like to see the Biden administration send clearer signals for businesses by setting interim dates for the 50-52% by 2030 target the president announced at the Leaders Summit on Climate last week. (See Biden Commits US to Cutting GHG Emissions 50% by 2030.)

BP, he said, has made its interim targets clear in terms of reducing carbon intensity, absolute reductions of carbon emissions and absolute reductions of the oil and gas the company produces. The company set 2025, 2030 and 2050 targets for achieving net zero across its operations and in its upstream oil and gas production.

Industry, transportation and electricity account for most global emissions today, Cohen said, and green companies alone cannot transform those three sectors to meet Paris agreement goals.

The ‘Greening’ Process

More companies need to be “greening,” he said, and companies that are not on the path to being green need a push with policies like carbon pricing.

“Investors should be expecting companies like ourselves to be very transparent, to demonstrate our progress along that pathway, and we need to provide specific targets and metrics towards that delivery of targets that we’ve set,” he said.

BP has a broad diversification strategy that includes solar, offshore wind, hydrogen and electric vehicle charging, Cohen said.

“Traditionally, we would have been in just oil and gas, but going forward, those businesses may face a higher cost of capital,” he said.

Investment bank RBC Capital Markets sees oil and gas companies as part of the ongoing energy transition and wants to help them in the greening process, Global Energy Strategist Michael Tran said.

“We have a dedicated [environmental, social, governance] ESG investing team that [helps hydrocarbon-heavy] companies transition, because we believe that they’re part of the evolutionary process,” Tran said.

‘Part of the Solution’

The bank is making progress to help those companies globally, but there’s more work to do.

“Unlike other banks that have stopped lending to oil and gas companies, we want to be part of the solution,” he said.

The ESG area of finance represents a set of evaluation factors that fall outside of traditional investment analyses, Gorham said. It measures how sustainable an investment is across environmental, social and corporate governance factors.

“We see people lump companies and entire industries into this categorization of bad actors in terms of ESG performance, but you could be a mining company, an oil and gas company or utility and you could really have a strong ESG profile,” Gorham said.

Some banks are starting to offer sustainability-linked bonds, which Tran said straddles both engagement and divestment themes for hydrocarbon-heavy industries.

The product, he said, offers a company a loan at a certain interest rate that is tied to sustainable achievements.

“If a company has certain targets or milestones … and it shows progress towards the environment, diversity, inclusion or social equality [goals], then the interest rate or cost of capital falls with each milestone,” Tran said. “It’s an interesting idea in terms of helping companies transition and become part of the solution. I think we all need to be a little bit more open-minded in terms of how we help facilitate that change.”