Leading corporate climate pledges ‘wholly insufficient’ to help reach 1.5C
Major new analysis of the most ambitious climate commitments of 24 leading companies has found that near-term efforts to decarbonise are “wholly insufficient” to enable firms to reach net-zero in the long run, with a reliance on carbon offsetting outlined as a major concern.
The latest Corporate Climate Responsibility Monitor from the New Climate Institute and Carbon Market Watch warns that the decarbonisation targets of 24 corporates viewed as “climate leaders” are “mired by ambiguity” and fail to support long-term net-zero aspirations with shorter-term efforts to cut emissions.
The report warns that the long-term net-zero pledges of corporates run the risk of greenwashing as they distract from the fact that decarbonisation plans up to 2030 will go less than halfway to what is required to align with the 1.5C limit of the Paris Agreement.
In aggregate, the companies covered by the report – including Google, Maersk, H&M, Apple and Microsoft – would collectively reduce value chain emissions by just 15% by 2030 based on current commitment, far less than the 43% that the report claims is in alignment with 1.5C.
The report finds that only shipping firm Maersk has a “reasonable” climate strategy, with Apple, ArcelorMittal, Google, H&M Group, Holcim, Microsoft, Stellantis and Thyssenkrupp having a moderate level of integrity in their commitments. American Airlines, JBS, Carrefour and Samsung Electronics were the worst-performing companies based on the report’s metrics.
One of the report authors, Thomas Day of NewClimate Institute, said: “In this critical decade for climate action, companies’ current plans do not reflect the necessary urgency for emission reductions. 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.”
Indeed, the Science Based Targets initiative’s (SBTi) Net-Zero Standard claims that businesses would need to cut emissions by at least 90% for most sectors. However, the new report finds that collective commitments from the 24 firms would deliver just a 36% reduction in carbon emissions.
A key concern around these targets is how corporations are approaching offsetting. Half of the companies assessed currently claim to be carbon neutral, but don’t articulate that this doesn’t account for the value chain and can therefore use offsets to cover less than 3% of their actual emissions, on average.
More than 75% of the companies also plan to “heavily rely on offsetting”. The report warns that this casts doubt over net-zero progress because a lot of nature-based carbon storage projects are unsuitable to offset emissions. The report also warns that the scale of demand for carbon credits from these corporate alone would require the resources of up to four planet Earths if other businesses implemented similar visions.
The analysis also states that companies will need to work with regulators and voluntary standard-setting initiatives to reappraise net-zero targets. The analysis points to the work of the UN High-Level Expert Group and the International Standards Organisation to showcase that good corporate climate practices need to be redefined.
This latest report does share some good practices that are being demonstrated by corporates. Maersk was praised for its alternative fuels and vessels investments, while Google was noted for a “pioneering” 24/7 monitoring and matching renewable energy generation with consumption.