The climate plans of most major corporations fall well short of their “net zero” claims, according to the 2023 Corporate Climate Responsibility Monitor (CCRM), a new report by climate-focused non-profits NewClimate Institute and Carbon Market Watch, which found that companies’ near- and long-term emissions reduction strategies were only aligned with minor actual emissions reductions, and relied heavily on offsetting schemes.
While the report found little progress on advancing corporate climate strategies over the past year, it also highlighted corporate leaders with deep decarbonization commitments and leading initiatives to achieve emissions reductions.
For the report, the organizations examined the emissions reductions pledges and plans of 24 global companies across eight high-emitting sectors, selected as the largest three companies in each of the sectors associated with the UN-backed Race to Zero campaign. Each of the companies has made a ‘net zero’ or ‘carbon neutral’ or similar pledge, with target dates typically between 2040 and 2050, and 22 of the companies have set interim 2030 targets as well.
The study found that the only half of the companies’ climate pledges commit to explicit emissions reduction targets, and that collectively, the commitments would only translate to a 36% reduction in the companies’ combined greenhouse gas (GHG) emissions footprint by the long-term target years. The report assessed more than 70% of the companies’ long-term targets to be of “poor integrity,” based on sufficiency compared to sector-specific 1.5 °C-aligned benchmarks, and the appropriateness of the terminology used in the pledge communication.
Five companies stood out, however, for commitments to reduce emissions by at least 90%, including H&M Group, Holcim, Stellantis, Maersk, and Thyssenkrupp.
Most near-term targets studied were found to be insufficiently aligned with emissions reductions compatible with global climate goals, with the median assessed 2030 emissions reduction goal expected to deliver only a 15% reduction, compared to reductions of 43% to 48% required to limit warming to 1.5 °C according to the IPCC. While the claims made in corporate pledges typically communicate larger reductions, the report found that they often address only a portion of emissions scopes, and exclude key Scope 3 value chain emission sources which typically account for the majority of corporate carbon footprints, or rely heavily on offsetting.
Sabine Frank, Executive Director of Carbon Market Watch, said:
“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.”
One of the key areas described in the report as a “major stumbling block for the credibility of corporate climate strategies,” is the use of offsetting plans to achieve net zero goals. The report found that the companies plan to offset between 23% and 45% of their combined emission footprint, with 23 of the 24 companies relying on some form of offsetting to hit their targets. Additionally, at least three quarters of the companies rely on forestry and land-use related offsets, which would significantly outstrip the global availability of such assets.
Carbon Market Watch Policy Director Sam Van den plas, said:
“Not only do these solutions only store carbon temporarily and are vulnerable to reversals, we would need a second planet Earth to absorb global emissions if everyone decided to offset like these corporations.”
The report did highlight some corporate climate action bright spots, including improvements in disclosure and transparency, with most companies assessed as disclosing emissions data with at least moderate levels of transparency across all emissions scopes. The report also highlighted the actions of a few companies with initiatives in place to address key emission sources, such as Google’s 24/7 renewable energy monitoring and matching program, Maersk’s investments in alternative fuels and vessels, and Deutsche Post’s fleet electrification and low carbon fuel programs. Similarly, the report indicated traction by some companies in addressing supply chain emissions, such as efforts by Apple, Walmart, Foxconn and H&M to support their suppliers in purchasing renewable electricity.
Click here to access the 2023 Corporate Climate Responsibility Monitor.
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