The world’s biggest and wealthiest companies are failing to deliver on climate pledges, according to analysis that calls on governments to crack down on corporate greenwashing.
A report by Europe-based environmental organisations NewClimate Institute and Carbon Market Watch, assessed the climate plans of 24 companies, including Smarties manufacturer, Nestlé, and Volkswagen. The study found only a shipping firm, Maersk, had climate plans of “reasonable integrity”, while the rest of the companies were rated as having moderate to very low levels of credibility.
“For the majority of companies, we found their climate strategies to be lacking,” said Thomas Day, a researcher at the NewClimate Institute who co-authored the report.
The 24 companies were selected because they have all presented themselves as climate leaders and are members of the UN-backed Race to Zero campaign. Researchers believed they serve as role models for other large, medium, and small companies around the world. The analysis of these organisations was expected to provide the best prospects for the identification of replicable good practice, and scrutiny of their plans was also necessary to identify whether these companies set the right examples.
The report found that 15 of the 24 companies surveyed had climate strategies that were deemed to be low or very low in integrity due to the inadequacy or complete lack of explicit emission reduction commitments, alongside ambiguous net zero pledges. The report highlighted how the strategies did not represent examples of good practice climate leadership, and that companies’ climate change commitments often do not add up to what their pledges might claim.
Many companies only address a limited scope of emission sources, such as direct emissions (scope 1) or emissions from procured energy (scope 2). Several companies did consider other indirect emission categories (scope 3) in their 2030 targets, but only hand-picked sources. Scope 3 emissions account for over 90% of the GHG emission footprints for most of the companies assessed, which meant a lack of focus led to poorer overall results.
Only five of the 24 companies involved – H&M Group, Holcim, Stellantis, Maersk, and Thyssenkrupp – have committed to reduce their emissions by at least 90% by 2030.
According to the report, some 2030 targets are also misleading due to an overreliance on offsetting, which the report calls a ‘major stumbling block’ for the credibility of corporate climate strategies.
Carbon offsetting has recently faced criticised for its unreliability in achieving suggested emissions reductions, however climate ratings provider Sylvera, hit back at these accusations in a statement published on their website.
Worryingly, the report details how current corporate climate pledges for 2030 are insufficient to achieve the necessary economy-wide emission reductions to limit temperature increase to 1.5 °C. The median absolute emission reduction commitment of the 22 companies with 2030 targets is only 15% of full-value chain emissions from 2019 to 2030, which may increase to 21% in the most optimistic scenario. However, this falls far short of the 43% and 48% reductions required between 2019 and 2030 to achieve the 1.5 °C temperature limit.
