Concerns mount over loopholes in corporate climate strategies

The 2024 edition of the Corporate Climate Responsibility Monitor, an annual assessment of climate plans from 51 multinational businesses, has revealed that the average large firm is planning for a 30% reduction in its absolute emissions footprint by 2030.

In contrast, the Intergovernmental Panel on Climate Change (IPCC) has recommended that a 43-50% reduction in global emissions, against a 2017 baseline, is aimed for to give the best chance of reaching net-zero by mid-century along a 1.5C-aligned pathway.

Several companies included in the Monitor are only planning to cut their emissions by between 5% and 20% this decade. Companies in this cohort include Uniqlo’s parent company Fast Retailing, the Korea Electric Power Corporation (KEPCO), Duke Energy and Walmart.

This is largely the result of emissions targets being set on an intensity basis. Such targets leave wiggle room for companies to grow their overall emissions footprint.

Another prevalent trend is the exclusion of Scope 3 (indirect) emissions from targets, despite the fact that such sources of emissions typically account for the majority of a large business’s overall emissions footprint.

The Monitor, co-developed by Carbon Market Watch and the NewClimate Institute, also dubs 2030 emissions goals from JBS, American Airlines, Hitachi, PepsiCo, Daimler Truck, Engie, Tesco, Toyota and Volvo Group as either ‘very poor’ or ‘unclear’.

Overall, none of the companies covered by the report were assessed to have climate strategies of a “high” integrity.

The report states: “Most companies continue to present 2030 and net-zero targets that are either ambiguous or only commit to limited emission reductions.

“Often, targets cannot be taken at face value as companies leave out certain emission sources, use non-harmonised base years, do not report updated base year emissions, or do not provide contextualising information to understand what the targets mean in absolute terms, among other issues.”

‘Science-based’?

The most significant of these ‘other issues’ touched upon in the report is an over-reliance by many businesses on unproven solutions. Several of the utilities included are betting on man-made carbon capture technologies, for example, which are not yet commercially mature, rather than more rapidly transitioning away from fossil fuels. Others are set to purchase carbon offsets above and beyond covering their ‘residual’ emissions.

Silke Mooldijk from NewClimate Institute said there is a need for “clearer guidance on sector-specific transition plans to promote emerging good practice, instead of the false solutions that we too often see”.

Such guidance was published by the UK’s Transition Plan Taskforce on Monday (8 April) – after the Monitor was compiled.

Carbon Market Watch and the NewClimate Institute are urging businesses to assess whether their climate plans align with the recommendations set out by the ISO and UN’s High-Level Expert Group on Net-Zero.

This latter framework was published during the COP27 climate conference in winter 2022 and is designed to be used by financial institutions, cities and regions as well as businesses. It covers topics such as the inclusion of Scope 3 emissions, restricting the use of voluntary carbon credits and phasing out coal across value chains. Lobbying is also included; the framework stipulates that businesses should not directly or indirectly engage in lobbying contrary to their stated net-zero ambitions.

The Monitor report suggests that this framework could be more water-tight than those provided by the Science-Based Targets Initiative (SBTi). The Initiative is the world’s largest verifier of corporate climate targets, with 5,100+ firms having received verification to date.

The Monitor notes that the Initiative requires companies to review their 2030 targets every five years from the date of the original approval, which will leave little wiggle room for those gaining approval in 2024 and 2025. It is urging the SBTi to consider a biannual review requirement.

The SBTi is in the process of a structural update to accomodate increased demand for target setting. It announced earlier this year that it is striving to separate its target validation and standard setting divisions, among making other strategic alterations.

Related feature: Why are businesses struggling to verify their science-based net-zero targets?