Norway tops KPMG’s first-ever Net Zero Readiness Index
Oil-rich Nordic nation deemed ‘most prepared’ and ‘ready’ to reach Net Zero by 2050
Oil-rich Nordic nation deemed ‘most prepared’ and ‘ready’ to reach Net Zero by 2050
- First ever Net Zero Readiness Index (‘NZRI’) created to assess countries’ readiness to transition to Net Zero
- Northern Europe dominates top spots, with UK and Sweden in second and third place
- A lack of delivery capability is a weak point in global Net Zero emissions ambitions
The oil-rich Nordic nation of Norway has been ranked number one in KPMG’s first-ever Net Zero Readiness Index (NZRI).
The report compares the progress of a selection of countries in reducing the greenhouse gas emissions that cause climate change and assesses their preparedness and ability to achieve Net Zero by 2050. Using 103 indicators, recognized as key drivers to achieving Net Zero, the top 25 performing countries and seven ‘countries to watch’ were identified.
The Index highlights that some countries are lagging in adopting Net Zero with only 9 of those surveyed, who account for approximately 8 percent of global emissions, having legally binding commitments in place. In order to stimulate delivery capability at the sector level, these targets need to be backed by robust strategies, policies and support mechanisms, In most jurisdictions the NZRI preparedness on a national level is mirrored by the level of readiness at the sector level.
A lack of delivery capability is a weak point in global Net Zero ambitions. The Index shows that those countries with a Net Zero target in place, either legally binding or policy, demonstrate stronger capability across sectors. The report also shows a correlation between prosperity and the readiness to achieve Net Zero, highlighting the need to escalate the mobilization of support to developing economies.
Insights from all surveyed nations show that whilst the global financial sector is increasingly factoring climate risk into their investment and lending decisions, governments have a critical role to play in enhancing access to such financing by creating enabling environments such as sustainable finance strategies, policies and regulatory frameworks.
These country insights also help to highlight the importance of political alignment and public support in the success of key decarbonization initiatives.
Despite being one of the world’s largest oil and gas exporters, Norway topped this year’s NZRI, partly due to private and public investment in renewable energy and electrified transport across the country. In 2016, the Norwegian parliament voted to bring forward its target date for carbon neutrality from 2050 to 2030. However, despite their top ranking, the nation still faces significant decisions over how it continues to tackle challenges in their transition to net zero.
The UK, which is preparing to host the COP26 Climate Summit next month, took overall second place, due in-part to cross-party political support and clear legally-backed targets that have enabled the comparatively swift decarbonization of the country’s power generation sector, but many obstacles remain – particularly on heat and buildings.
Norway’s Nordic neighbor, Sweden, ranked third for being ‘highly ambitious’ and an international advocate for climate policy, green energy and technology. The country’s next step to Net Zero is to reduce its continued reliance on agricultural exports and imports.
The NZRI top 25 countries were:
- United Kingdom
- New Zealand
- South Korea
- United States of America
- United Arab Emirates
The seven countries to watch were:
- Saudi Arabia
- South Africa
The publication of the Net Zero Readiness Index comes ahead of November’s crucial COP26 Climate Summit in Glasgow. The United Nations outlines that greenhouses gases in the atmosphere are at their highest level for three million years, driving a global temperature increase of 0.85 degrees Celsius between 1880 and 2012 and a rise in sea-levels of 19cm. Political and business leaders are becoming increasingly aligned that immediate action is required to stop the catastrophic social, environmental and economic impacts further temperature rises could have on the planet.
Richard Threlfall, Global Head of KPMG IMPACT, said:
Climate change is the existential challenge facing humanity, but we need to face what seems like an overwhelming challenge with positivity and a sense of collective responsibility. It is vital that every individual, organization and country collaborates to an unprecedented degree, and with transparency and honesty. I hope that the NZRI will encourage countries that have a long way to go to learn from those who are making the most progress, and encourage everyone who reads it to play their part in getting us to Net Zero.
Mike Hayes, Global Head of Climate Change & Decarbonization at KPMG, commented:
Over the past 18 months, we have witnessed a phenomenal and welcome rise in net zero and science-based targets commitments from the public and private sector and national Governments. As a result, we’re starting to see businesses take a more proactive approach to addressing their decarbonization objectives. The fundamental challenge for business however is how to move from making commitments to delivering them and stakeholders will want to see progress before too long. It is clear that the business community and political leaders are responding to the crisis, but there is clearly much more that could and should be done. KPMG’s Net Zero Readiness Index highlights the patchwork effect that we’re now starting to see globally. From territory to territory, different priorities are having different effects. With COP26 a matter of weeks away, this is our moment to learn from each other and ensure world and business leaders take a collaborative action-focused approach to the climate challenge and help make net zero a reality before it is too late.
China has already built a strong foundation for an effective energy transition. China has an exceptional level of installed renewable energy capacity, which has reached 925 GW and is about triple the level of US. Moreover, China has the world's largest electric vehicle market with 5.4 million electric vehicles in service in 2020, accounting for almost half of the world's electric car park. This large market allows local automakers to grow their business and operate in a sustainable way. In addition, China will continue to invest in a new energy vehicle ecosystem, enhancing electric vehicle production capacity, research and development of battery technology, as well as charging facilities. China plans for NEV sales to account for 20% of the country’s total vehicle sales by 2025. Although the country’s 30·60 decarbonisation goal is a significant challenge due to high reliance on coal, its practice, experience and commitment in this area can be a good model to the world, especially to developing countries. China is ranked among the leaders in the KPMG Net Zero Readiness Index (NZRI).
Wei Lin, Partner, Head of Environmental, Social and Governance, KPMG China
Climate change is affecting every one of us. It takes strong action to reduce our negative impact on the environment and to build a sustainable and resilient future. We have been actively seeking ways to reduce our impact on the global environment. KPMG has set an ambitious target for emission reduction and renewable electricity consumption, and has already exceeded it. To drive change and increase sustainability in both the market and the company internally, KPMG China has established an ESG and IMPACT committee to oversee and guide the strategic development and operation of the company's ESG commitments, in line with KPMG’s global Impact Plan. We released our first ESG report in March this year, focusing on the areas of Planet, People, Prosperity and Governance. We hope to bring together KPMG firms’ global expertise into our strategies around ESG/sustainability, economic/social development, climate change and decarbonisation. We aim to support clients with business and supply chain transformations to reduce emissions, as well as the shift to renewable energy and the integration of climate risks into business strategies. We also provide extensive advisory services to clients on green finance and are working with the World Economic Forum to promote systemic changes to accelerate energy conversion.
Tracy Yang, Partner, Head of Corporate Affairs, KPMG China
The 2021 Net Zero Readiness Index was produced by KPMG IMPACT, established last year to support and empower the global organization and KPMG firms’ clients in delivering on the UN’s Sustainable Development Goals – from ESG & Sustainability to Economic & Social Development, Sustainable Finance, Climate Change and Decarbonization and Measurement, Assurance & Reporting.
An online copy of KPMG’s Net Zero Readiness Index can be accessed at: home.kpmg/nzri.
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About the Net Zero Readiness Index (NZRI)
The Net Zero Readiness Index (NZRI) is a tool that compares the progress of 32 countries in reducing the greenhouse gas emissions that cause climate change and assesses their preparedness and ability to achieve Net Zero by 2050. The 32 participating countries have been grouped into two categories: the top-performing 25 countries in the race to Net Zero based on progress to-date and established initiatives; and seven countries to watch where there are significant opportunities to advance decarbonization efforts through large scale projects and emerging escalation initiatives. For each of the 32 countries, the NZRI considers 103 indicators that KPMG considers as key drivers to achieving Net Zero. The indicators have been split between national preparedness and sector readiness. National preparedness considers a country’s national commitment to decarbonize, its past decarbonization performance, country-specific drivers of emissions such as population growth, and the national enabling environment for decarbonization. Sector readiness covers electricity and heat; transport; buildings; industry; and agriculture, land use, land use change and forestry (in the report referred to as agriculture, land use and forestry). The index looks at the indicators for sector readiness through three lenses: decarbonization status, government action and delivery capability. The indicators are aligned to the fifth assessment report of the UN’s Intergovernmental Panel on Climate Change published in 2014[i] and insights from KPMG experts in each country providing local context and insight into challenges, successes and imminent initiatives. The intended audience for the NZRI is governments and the public sector, multilateral organizations, investors and financial institutions, the private sector and the general public. It is likely to be of particular interest to any entity, department, business or person with an interest or responsibility in advancing the Net Zero agenda. This study uses the World Resources Institute definition of ‘Net Zero’. Primarily, this involves reducing greenhouse gas emissions caused by humans as close as possible to zero. Remaining emissions are balanced by an equivalent amount of carbon removal from the atmosphere, effectively neutralizing humanity’s future impact on the world’s climate. The main greenhouse gas is carbon dioxide, and work towards Net Zero is often called ‘decarbonization’ to reflect the focus on this gas, which is released when fossil fuels are burnt. However, emissions of methane and nitrous oxide also make significant contributions to climate change and are included in this index.
About KPMG International
KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. We operate in 146 countries and territories and in FY20 had close to 227,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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About KPMG IMPACT
Launched in June 2020, KPMG IMPACT is the accelerator for KPMG’s global ESG strategy. It is the platform which supports and empowers KPMG professionals as they assist clients in fulfilling their purpose, achieving their ESG goals, and supporting the world’s attainment of the UN Sustainable Development Goals. It helps clients across ESG & Sustainability, Economic & Social Development, Sustainable Finance, Climate Change & Decarbonization, and Measurement, Assurance & Reporting.
Click here to read more about KPMG IMPACT.