Corporate So-Called Climate Leaders Rely on ‘Greenwashed’ Net Zero Plans, Report Finds
In order to limit global heating to 1.5 degrees Celsius above pre-industrial levels, and avoid the worst impacts of the climate crisis, we need to lower greenhouse gas emissions by 43 percent by 2030. Yet the climate plans of 24 major companies that paint themselves as environmental leaders would only see their supply chain emissions fall by 15 percent by that date, or 21 percent at the most generous interpretation of their plans.
That’s one key finding from New Climate Institute and Carbon Market Watch’s second annual Corporate Climate Responsibility Monitor, released Monday.
“In this critical decade for climate action, companies’ current plans do not reflect the necessary urgency for emission reductions,” report co-author Thomas Day of NewClimate Institute said in a press release. “Regulators, voluntary initiatives and companies must place a renewed and urgent focus on the integrity of companies’ emission reduction plans up to 2030. The discourse on longer-term net zero should not distract from the immediate task at hand.”
The 24 multinational corporations assessed in the report together contributed around four percent of global greenhouse gas emissions in 2019. They include shipping giant Maersk, food or beverage companies like PepsiCo and Nestlé, retailers like H&M Group and Fast Retailing (Uniqlo) and tech companies like Apple, Google and Microsoft. All of these companies have pledged themselves to curbing their emissions in line with limiting global warming to 1.5 degrees as part of an initiative affiliated with the UN-backed Race to Zero campaign.
However, the analysis revealed that many of them are in fact dragging their feet. Of the 24 companies, 15 of them had climate strategies that the report considered to be low or very low integrity.
“At a time when corporations need to come clean about their climate impact and shrink their carbon footprint, many are exploiting vague and misleading ‘net zero’ pledges to greenwash their brand while continuing with business as usual,” Carbon Market Watch’s Executive Director Sabine Frank said, as The Wall Street Journal reported.
The report found three major problems with corporate climate plans:
- Missing the deadline: While 22 companies had set 2030 targets, these targets were not nearly ambitious enough to match the emissions reductions needed by that date. This was partly because many of the near-term targets only focused on emissions from the companies’ direct activities or energy sourcing, otherwise known as scope 1 and 2 emissions. This excludes all indirect, or scope 3 emissions, such as emissions from the use of a company’s product. But these emissions made up more than 90 percent of most companies’ footprints.
- Shallow Pledges: Many of the companies’ net zero pledges were ambiguous and not actually in line with “deep decarbonization.” Only five companies — H&M Group, Holcim, Stellantis, Maersk, and Thyssenkrupp — actually had plans to cut emissions by at least 90 percent by their net-zero target date. In total, all 24 plans would only see the companies’ combined emissions fall by 36 percent by the so-called net-zero deadline.
- Offending Offsets: Many of the companies’ plans still relied too heavily on carbon offsets, which have been repeatedly shown to be unreliable. At least 75 percent of the companies relied on offsets based on preserving forests or other natural carbon sinks. However, by their living nature, these projects can’t guarantee long term carbon storage, and sufficiently canceling out emissions this way would require two to four planet Earths if other companies were to follow suit.
“By making such outlandish carbon neutrality claims, these corporations are not only misleading consumers and investors, but they are also exposing themselves to increasing legal and reputational liability,” policy expert on carbon markets at Carbon Market Watch Lindsay Otis said in the press release. “Instead, they should implement ambitious climate plans to reduce their own emissions, while financing action outside of their own activities, without claiming that this makes them carbon neutral.”
On an individual basis, Maersk came out the best with a plan of “reasonable integrity,” helped along in part by its investments in alternative fuels and ships. On the other side of the spectrum, American Airlines, Samsung, Carrefour, Deutsche Post DHL, Fast Retailing (Uniqlo), Inditex (Zara), Nestlé, PepsiCo, Volkswagen and Walmart all had plans of low or very low integrity.
In response to the report, Nestlé defended its climate plans, saying it had used the Science-Based Targets Initiative (SBTi) standard.
“There is clearly disagreement between these two expert organizations (New Climate Institute (NCI) and the Science-Based Targets Initiative (SBTi)), with regard to the approach companies should take toward achieving net zero emissions,” the company wrote in a statement. “This is problematic since, given the enormity and urgency of addressing climate change, companies need clear, common guidance on which to base their approach.” The report does offer some guidance on what companies should do, according to The Wall Street Journal. In addition to making sure that their net-zero plans do cover at least 90 percent of total emissions, they can also do their best to calculate and disclose scope 1, 2 and 3 emissions, help their suppliers become more sustainable and make sure that they are using 24/7 renewable energy.