The world’s largest corporations are promising far more climate action than they are delivering
Big companies are emphasizing intentions to reduce carbon emissions to net zero, but according to the results of the latest analysis of corporate climate responsibility, 25 of the world’s largest are on track to reduce carbon emissions. only 40% on average, well below 100% complaints. One of the findings was that large corporations are largely failing a net zero climate engagement test.
The Corporate Climate Responsibility Monitor, conducted by the NewClimate Institute in conjunction with Carbon Market Watch, included 25 of the world’s largest companies operating in a variety of industries and geographies – to determine the transparency and integrity of their climate commitments.
Ambitious claims too often lack substance and can mislead consumers and regulators alike, analysis finds
Thomas Day of the NewClimate Institute, lead author of the study, believes that due to increasing pressure on companies to respond to climate change, their ambitious claims too often lack substance. This can further mislead consumers and regulators, who are key to guiding the company’s strategic direction, Day says.
He pointed out that the intention was to uncover as many replicable best practices as possible, but that the team was surprised and disappointed with the results of the analysis and the overall integrity of the companies’ claims. Day adds that even relatively well-performing companies exaggerate their actions.
Business Integrity and Net Zero Emissions
Only one company’s net zero commitment received a reasonable integrity rating. The promises of three others have moderate integrity. Ten have low integrity and the other 12 have very poor integrity.
For some of the companies, their key pledges serve as a long-term vision backed by specific short-term emissions reduction targets, the analysis reveals. Although none of the pledges have a high degree of integrity overall, Maersk ranks first with a pledge with reasonable integrity, followed by Apple, Sony and Vodafone with moderate integrity.
Company promises have been undermined by controversial plans to cut emissions elsewhere, hidden critical information and accounting tricks
The authors point out that most companies fail to set and pursue ambitious carbon neutrality goals. According to the document, many promises have been undermined by ongoing emission reduction plans elsewhere, hidden critical information and accounting tricks.
The results show that Amazon, Deutsche Telekom, Enel, GlaxoSmithKline, Google, Hitachi, IKEA, Vale, Volkswagen and Walmart’s key commitments to achieve climate goals have low integrity, while Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.ON SE, JBS, Nestlé, Novartis, Saint-Gobain and Unilever received a very low integrity rating from the NewClimate Institute.
Corporate Responsibility Analysis Criteria
The Corporate Climate Responsibility Monitor, published by the NewClimate Institute and Carbon Market Watch, provides a methodology and criteria-based assessment of corporate transparency in corporate target setting and reporting. It includes their climate targets, the number of carbon offsets they plan to use and their reliability, as well as the progress made in reducing their emissions.
Assessments are made for companies that have committed to large-scale climate change mitigation commitments
The assessments are only made for companies that had committed to large-scale climate change mitigation commitments within some of the major corporate climate action networks and initiatives, the authors explained. To get an overview of several geographical areas and sectors, the choice is limited to two companies per sector of the economy and to a maximum of five companies from the same country, specify the authors.
Promises and obligations
Large corporate climate commitments require detailed assessment and in the majority of cases cannot be taken at face value, says Sybrig Smith, climate policy analyst at the NewClimate Institute.
Key finding is that companies’ net zero liabilities are not what they may seem, says lead author of analysis
“The main conclusion is that companies’ net zero liabilities are not what they may seem. We found that the grand promises of 25 of the world’s largest companies actually only pledge to reduce emissions by 40% on average, not 100% as the terms ‘net zero’ and ‘carbon neutral’ suggest. carbon,” said Thomas Day.
Big commitments from just three of the 25 companies would result in a 90% reduction in emissions across their value chain: Maersk, Vodafone and Deutsche Telekom.
Thirteen companies have explicitly committed to reducing their emissions throughout their value chain. The reduction is only expected to average around 40% between 2019 and the target year. The other 12 companies have not committed to reducing their specific emissions by their target year.
In 2019, the total emissions of monitored companies represented 5% of global greenhouse gas emissions.
On average, the 25 companies specifically pledge to reduce only around 20% of their carbon footprint by their target year, compared to 2.7 gigatonnes of carbon dioxide equivalent (GtCO2e) from 2019, revealed the business monitor. This equates to around 5% of global greenhouse gas emissions.
Reliance on carbon offsets also undermines integrity, and 24 out of 25 companies are likely to rely on these carbon credits of varying quality, according to the analysis.
With ambitious goals, short-term actions are necessary
“Misleading advertising by companies has a real impact on consumers and decision makers. We are fooled into believing that these companies are taking sufficient action when the reality is far from the case,” said Gilles Dufrasne of Carbon Market Watch.
He stressed that such practices would continue without further regulation and that there was a need for governments and regulators to step up and stop the trend of greenwashing.
“Countries showed that we need a fresh start when adopting the Paris Agreement, and companies must take this into account in their own actions,” said Dufrasne.
Examples of climate leadership were also identified in the analysis. Google is developing innovative tools for renewable energy sources, while Maersk and Deutsche Post are investing heavily in decarbonization technologies.
Corporate regulators, along with standards initiatives, must find ways to differentiate and separate climate leadership from greenwashing
According to the authors, companies still have great potential to scale up their best climate practices. They stressed that regulators in business, along with standard-setting initiatives, must find ways to differentiate and separate climate leadership from greenwashing, as well as support ambitious innovation and accelerate decarbonization.
Conference in Serbia
What awaits the economy and companies operating in Serbia in the midst of global economic transformation, the challenges of climate change and the energy transition will be the topics of the upcoming conference Serbian companies on the evolution of the electricity market. The event will take place on February 22 in Belgrade, organized by Balkan Green Energy News.