A day after insurers were accused of investing billions of dollars in oil and gas projects a new report has cast doubt on the headline climate pledges of 25 of the world’s largest companies.
The Corporate Climate Responsibility Monitor, conducted by NewClimate Institute in collaboration with Carbon Market Watch said it had found in reality the pledges only commit to reduce their emissions by 40% on average, not 100% as suggested by their “net zero” and “carbon neutral” claims.
The monitor evaluated 25 major companies, operating across different sectors and geographies, to determine the transparency and integrity of their headline climate pledges.
“Companies’ headline climate pledges require detailed evaluation and in the majority of cases cannot be taken at face value,” said the report. “Only one company’s net zero pledge was evaluated as having ‘reasonable integrity’; three with ‘moderate’, ten with ‘low’ and the remaining 12 were rated as having ‘very low’ integrity.
“We set out to uncover as many replicable good practices as possible, but we were frankly surprised and disappointed at the overall integrity of the companies’ claims” said Thomas Day of NewClimate Institute, lead author of the study. “As pressure on companies to act on climate change rises, their ambitious-sounding headline claims all too often lack real substance, which can mislead both consumers and the regulators that are core to guiding their strategic direction. Even companies that are doing relatively well exaggerate their actions.”
“For the minority of the evaluated 25 companies, their headline pledges serve as a useful long-term vision, and are substantiated by specific short term emission reduction targets,” said the monitor. However, it added the majority of the companies with net zero or carbon neutrality pledges fail to put forward ambitious targets.
“Many company pledges are undermined by contentious plans to reduce emissions elsewhere, hidden critical information and accounting tricks,” it added.
The 13 companies that have backed their net zero headline pledges with explicit emission reduction commitments commit, on average, to reduce their full value chain emissions from 2019 by only 40%. The other 12 have no specific emissions reduction commitments for their net zero target year.
The headline pledges of just three of the 25 companies clearly commit to deep decarbonisation of over 90% of their full value chain emissions. At least five of the companies would effectively only reduce their emissions by less than 15%, often by excluding downstream or upstream emissions in their value chain.
“The exclusion of emission sources or market segments is a common issue that reduces the meaning of targets,” according to the research. “Eight companies exclude upstream or downstream emissions in their value chain, which usually account for over 90% of the emissions under their control.”
Offsetting approaches are also undermining integrity. 24 of 25 companies will likely rely on offsetting credits, of varying quality. At least two thirds of the companies rely on removals from forests and other biological activities, which can easily be reversed by, for example, a forest fire.”
“Some apparently ambitious targets may lead to very little short-term action,” explained the report.
“Misleading advertisements by companies have real impacts on consumers and policymakers. We’re fooled into believing that these companies are taking sufficient action when the reality is far from it.” said Gilles Dufrasne from Carbon Market Watch. “Without more regulation, this will continue. We need governments and regulatory bodies to step up and put an end to this greenwashing trend.”
“Companies must face the reality of a changing planet. What seemed acceptable a decade ago is no longer enough,” added Dufrasne. “Setting vague targets will get us nowhere without real action and can be worse than doing nothing if it misleads the public. Countries have shown that we need a fresh start when adopting the Paris Agreement, and companies need to reflect this in their own actions.”