Getting to Zero: New index maps progress on global warming goals

KPMG introduces the Net Zero Readiness Index, a comprehensive guide to tracking reduction in greenhouse gas emissions.

The United States still has plenty of work to do on reducing greenhouse gas emissions, but public and private sector financial pressures are now key drivers of change—and an important motivator for US companies to help meet the global goals of net zero emissions by 2050.

Those are just a few of the many compelling insights in KPMG’s groundbreaking new Net Zero Readiness Index 2021 (NZRI), our first-ever, comprehensive, data-rich report that tracks the progress of 32 countries in reducing the greenhouse gas emissions that cause climate change.

Overall, the US—second only to China as the world’s largest producer of greenhouse gases—was decidedly middle-of-the pack in our inaugural NZRI, ranking 14th amid incremental progress, political challenges, and regulatory complications due to disparate enforcement commitments at federal, state and local levels.

The top six performers, with Norway at No. 1, were all in Europe, and generally benefitted from early engagement on climate change issues. The 32 countries in the index collectively represent about three-quarters of all global emissions. Our index breaks out detailed rankings for the top 25 performers, as well as seven more countries that have significant opportunities for progress. Download the full report here.

Given the urgency and scale of the Net Zero challenge, the slow pace of countries adopting legally binding targets is deeply concerning.
Richard Threlfall, Global Head of KPMG IMPACT and Global Head of Infrastructure, KPMG International.

How our index works

The NZRI is a robust, landmark new tool that KPMG has developed to tangibly track and measure progress on climate change goals. As its foundation, it follows 103 indicators identified as key drivers to achieving net zero emissions by 2050. The indicators tie to guidance from the UN’s Intergovernmental Panel on Climate Change as well as insights from KPMG professionals. And overall, the 2050 target date was established by the UN intergovernmental panel in 2018 and has become the benchmark timeline against which progress on climate change is measured.

The indicators focus on each nation’s preparedness and commitment, as well as the readiness across the five highest-emitting sectors: electricity and heat, transport, buildings, industry and land use (primarily agriculture and forestry). The index evaluates readiness in these sectors through three lenses: decarbonization status, government action and delivery capability.

As a final reference point, our index also includes a qualitative overlay, with KPMG’s local experts providing context for each country and its unique challenges, successes and imminent initiatives.

The US view

Each country in our NZRI 2021 report demonstrated highly unique strengths, weaknesses and opportunities. But as the world’s largest and most influential economy, and the second-largest generator of greenhouse gases, the US, not surprisingly, has an outsized impact on the NZRI overall. Here are some quick insights from the comprehensive 124-page report:

The Standings: The US’s middle-of-the-pack No. 14 ranking in the top 25 performers looks worse on a true relative scale. Its 27.9 tally on the overall Readiness Index is significantly behind overall leaders Norway (49.2) and the United Kingdom (48.4), but much closer to a bottom 10 that includes Australia (23.5), Brazil (22.5) and China (19.4).

Be Prepared: The picture is a little brighter on national preparedness, where the US is No. 12 overall and indexes more closely to the top performers. The national preparedness measure largely reflects a country’s commitment to decarbonize, so in essence, this suggests there is growing intent to reduce emissions, even if current progress is off the mark.

Sector emission shares and performance 

The mandate challenge: One of the report’s top overall findings is that a country’s success often parallels a binding commitment to Net Zero goals backed by national legislation. This emerges as one of the US’s biggest challenges. While there have been some recent non-binding declarations and the US re-entered the UN Paris Agreement, the national political temperature continues to hamper federal laws and even regulatory measures. In some areas, states and even cities are on the leading edge for the US with local regulatory mandates.

Follow the money: On the bright side for the US—and highly relevant for business and financial leaders at just about every company these days—is the increasing role of both the public and private sector financial markets. Public companies are facing growing scrutiny from shareholders who now understand the long-term financial risks of climate change and are demanding more transparency on ESG and sustainability. And both the public and private sectors also see opportunity in green energy initiatives. Investors are already putting large volumes of capital into projects that support decarbonization, green bonds, loans linked to sustainability and the clean tech markets—driving potential innovations that could deliver Net Zero impact well beyond US borders.

A place to start

All 32 countries in our NZRI demonstrated awareness of the climate change challenges facing the entire planet, and at the very least, incremental efforts to change the collective trajectory and get to Net Zero by 2050. The stark reality is that global temperatures are rising, and the knock-on risks—from rising sea levels to financial threats—need to be addressed at the global level.

In some respects, real progress is being made, with new technology solutions, market and policy mechanisms, and consumer demands for change across the world. At the same time—and amid much global public commitments to change—emissions across the globe have continued to increase over the last 5 years.

The goal for our comprehensive new Net Zero Index, then, is to provide a tool—for governments and the public sector, multilateral organizations, investors and financial institutions, the private sector and the general public—to consistently measure and track progress on global efforts to combat climate change.

Contact us

Rob Fisher

Rob Fisher


+1 804-782-4226