The climate pledges of leading global companies don’t add up

NET-ZERO pledges made by some of the world’s largest corporations will reduce their greenhouse gas emissions by just 36 per cent, according to a new report, far short of the progress required to avert a catastrophic increase in global temperatures.

Galvanised by pressure from investors and growing consumer awareness of extreme weather, companies are coming out almost daily with new promises to curb their impact on the climate and the natural world. But regulations governing sustainability and sustainability claims remain underdeveloped and vary vastly from place to place, making it difficult to separate genuine progress from PR-laden hype.

Carbon Market Watch and the NewClimate Institute looked at 24 of the biggest global companies that have pledged to achieve carbon neutrality and positioned themselves as climate leaders.

Spread across eight industrial and consumer sectors, the companies featured in the second edition of the Corporate Climate Responsibility Monitor reported combined revenues of more than US$3 trillion in 2021.

The authors found that most of these companies’ future net-zero goals and current climate claims are “exaggerated, false and misleading”. Climate strategies lack short-term ambition, relying instead on long-term targets without fully explaining how they’re defined or how they would be achieved, the report found.

And although most of the companies analysed have made commitments against a 2030 deadline, their pledges are often limited in scope and insufficient to help meet the Paris Agreement goal of limiting global warming to 1.5C above pre-industrial times.

Overall, the authors found the climate strategies of 15 of the 24 companies to be of low or very low integrity.

Just five — H&M Group, Holcim, Stellantis, Maersk, and Thyssenkrupp — commit to decarbonising their emissions by at least around 90 per cent by their respective net-zero target years.

Ten of the 24 companies were also analysed in the 2022 report but the authors found that, despite some improvements in the guidelines around climate targets, there had been limited progress in the transparency or integrity of their climate strategies over the past year.

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“Nearly all companies are making these pledges. They’re making them as a response to consumer and investor pressure,” says Thomas Day, an analyst at NewClimate Institute, a nonprofit climate think tank. “But in making these voluntary targets, they’re also making the case to regulators that they do not need to be regulated.”

Among the corporations surveyed are global tech corporations like Apple and Microsoft and consumer goods giants including PepsiCo and Nestle.

Of the climate plans analysed in the report, only the shipping company Maersk received a ‘high’ integrity rating. Carrefour, a multinational food retailer, and JBS Foods, a meat producer, had among the lowest integrity scores.

The authors particularly criticised the over-reliance by almost all the companies surveyed on programmes that would offset their emissions against forestry or other land use projects.

Taken together, those offset plans far outstrip the technical potential of the world’s natural resources and are based on a fundamentally flawed understanding of how natural carbon sinks work, they wrote.

The report called for a ban on misleading climate claims, better enforcement of existing regulations and better oversight to prevent companies from “greenwashing”.

“It is really unrealistic to expect consumers to understand those claims, even though many of those communications are directly targeted at consumers,” said Gilles Dufrasne, a policy lead at Carbon Market Watch, a nonprofit that monitors carbon markets. BLOOMBERG