Only five of 24 companies hit the 90% emission reduction projection by their respective target years
The combined Net Zero pledges of 24 major global companies will reduce their total greenhouse-gas emissions by 36 per cent by their respective target years, typically 2040 or 2050, compared with the reduction of at least 90 per cent that is needed, a new report showed.
The Corporate Climate Responsibility Monitor 2023 published by Germany-based think-tank New Climate Institute (NCI), assessed the climate strategies of these industry-leading companies, critically analysing the extent to which they are meeting their climate goals.
“Most companies' climate strategies are mired by ambiguous commitments, offsetting plans that lack credibility and emission scope exclusions, but replicable good practice can be identified from a minority,” the report noted.
The report finds a slight improvement over the previous year’s iteration. Despite concerns about their goals and the overall gap, it highlights the best practices among these companies.
They have identified the climate strategies of 15 of the 24 companies to be of ‘low’ or ‘very low’ integrity. Their combined emission reduction commitments are wholly insufficient to align with decarbonisation trajectories that can help limit global warming to 1.5 degrees Celsius over pre-industrial levels; targets and potential offsetting plans remain ambiguous; and the exclusion of emission scopes severely undermines the targets of several companies.
A company’s Net Zero plans must reduce all emissions, including those from its entire value chain (referred to as Scope 3), by at least 90 per cent by their target date to illustrate a “commitment to deep decarbonisation”, the report stated.
This is consistent with the recommendations by the Science Based Targets initiative that carbon-removal credits be used to balance no more than 10 per cent of emissions.
Of the 24 companies examined in the report, five hit the 90 per cent target: Fast-fashion retailer H&M, cement-and-concrete maker Holcim, auto manufacturer Stellantis, shipping giant AP Moller-Maersk and engineering and steel company Thyssenkrupp.
The Net Zero plans of Holcim and H&M have also received approval from the Science Based Targets initiative.
Food retailer Koninklijke Ahold Delhaize, American Airlines Group Inc., Nestle and Maersk are among businesses seeking approval from SBTi, an organisation that drives climate action in the private sector by setting science-based emission reduction targets.
Of the climate plans analysed in the report, only the shipping company Maersk received a ‘high’ integrity rating. Companies like H&M group, Apple, Microsoft, and Google have moderate integrity ratings. Pepsico, Walmart, Amazon, and Nestle have low integrity. Samsung and American Airlines have very-low integrity ratings.
Climate pledges for 2030 fall well short of the economy-wide emission reductions required to stay below the 1.5°C temperature limit. For the 22 companies with targets for 2030, the report found that the targets translated to a median absolute emission reduction commitment of just 15 per cent of the total emissions between 2019 and 2030.
It may go up to 21 per cent under the most optimistic scenario. This compares to the need to cut global greenhouse gases and carbon dioxide emissions by 43 per cent and 48 per cent from 2019-2030, respectively, to be in line to limit the global temperature increase to 1.5°C.
In the future, 23 of the 24 companies will rely on some form of offsetting to achieve their Net Zero targets. Many companies need clarification about the role of offsets; based on available data, the report estimated that companies plan to offset at least 23 per cent and up to 45 per cent of their combined emissions footprint.
This is far more than SBTi's Net Zero Standard (10 per cent) and the ISO Net Zero Guidelines regarding offsetting.
The report mentioned that there is room for improvement in the emission disclosure of companies, but found that the disclosure of most companies is of at least moderate transparency.
Three companies, Apple, Maersk and Microsoft, were found to have reported and disclosed with high transparency and integrity for at least three of the four emission scopes. In their public-facing sustainability reports, Carrefour, Foxconn, Samsung, Stellantis and Walmart do not unveil most of their Scope 3 emissions.
While three companies (Carrefour, Samsung, Walmart) exclude more than 80 per cent of their emissions across the value chain from their Net Zero targets, only five companies (Ahold, Delhaize, Foxconn, H&M Group, PepsiCo and Stellantis) cover 100 per cent of their emissions either under their 2030 emission reduction targets and their Net Zero targets.
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