Report Calls Out Big Corporations for Falling Short of Net-Zero Pledges
The race to zero emissions depends on the actions of national and local actors across the world. Photo: Daniel Moqvist /Unsplash
To help limit the global temperature rise to 1.5 degree Celsius above pre-industrial era levels, The Paris Agreement called for the world to aim for net zero emissions by 2050. Since then, at least one fifth of the world’s 2,000 largest public companies have committed to meet net zero targets, according to an article published in 2021 by Forbes. However, the quality of their climate commitments and emission reduction plans might not be as reassuring as companies have marketed to the public.
A report published by the independent Germany-based organization, New Climate Institute, assessed the transparency and integrity of the emission reduction and net-zero targets of 25 high profile corporations. The group investigated 25 multinational corporations that together had a revenue of $3.2 trillion in 2020 and accounted for 5 percent of global greenhouse-gas emissions in 2019. The report found they are falling short of their net-zero emission pledges.
More specifically, the report gave out a “low integrity” assessment for nearly half of the corporations on the list, including Nestle, Unilever, and JBS. These corporations lack a specific commitment to reduce emissions by their target net-zero year. Upon examination, the report found that their commitments and current measures will only cut emissions by 40 percent on average, which is far less than what the pledges suggested.
A graph from the report showcasing the integrity of net-zero pledges and emission reduction commitments. Photo: Corporate Climate Responsibility Monitor 2022
Thomas Day, the lead author of the report, says that for these large companies, there is a lack of “sufficient regulation or accountability.” According to the report, companies can get away with half-hearted commitments due to leniency in the current emission reporting and certification process.
The authors identified a common trend amongst the corporations: they were reporting only Scope 1 and 2 emissions which include vehicle use or energy use in their facilities. However, the Scope 3 emissions, which include those produced indirectly by a company’s end users, are often left out of the calculation despite being typically the biggest offenders as they apply to the entire value chain.
However, a number of companies mentioned in the report including Unilever, BMW and Accenture, fired back against the report’s standards of assessment, saying that the metrics used in the report differed from the industry norms set previously by other organizations. For example, Benjamin Ware, global head of climate delivery and sustainable sourcing at Nestlé said that the authors of the report had “created their own parameters.”
One of the agencies whose protocols were referred to by the corporations in their defense was Science Based Targets Initiative, an independent oversight group that has become the arbiter of corporate climate action. The group is also facing criticism from the report for awarding certification of “1.5C compatible” emissions targets to 16 of the 25 companies. In response, the group said it welcomed scrutiny, was reviewing its Scope 3 criteria and would update its methodology by the end of the year.