Green light
Green, empty promises? The truth behind corporate
climate pledges
Facing a reckoning over their contribution to the
climate emergency, companies are coming out with a record number of pledges
by Jocelyn
Timperley
Mon 26 Jul
2021 08.00 BST
For climate
campaigners, 26 May seemed like the start of a long-awaited reckoning for oil
and gas companies.
Over a
single 24-hour period, a Dutch court ordered Shell to dramatically cut
emissions, shareholders voted to force Chevron to reduce emissions from the
products it sells, and a tiny activist investment firm secured three positions
on ExxonMobil’s 12-member board for candidates committed to climate action.
When trying
to ascribe responsibility for the climate crisis, it’s hard to overstate the
outsized role fossil fuel companies have played. The products of just 100
private and state-owned fossil fuel companies were linked to 71% of global
industrial greenhouse gas emissions since 1988, according to a groundbreaking
2017 report.
A
subsequent Guardian investigation in 2019 found 20 fossil fuel companies,
including Chevron and ExxonMobil, were responsible for more than one-third of
all greenhouse gas emissions since 1965 – the point at which experts say fossil
fuel companies were aware of the link between their products and climate
change.
But it’s
not just fossil fuel companies fueling the climate crisis. Even if we
immediately phased out oil and gas, emissions from agriculture alone may make
it impossible to limit warming to the 1.5C goal in the Paris agreement.
Across a
slew of sectors from food and fast fashion to construction and heavy industry,
companies have helped drive climate chaos. As climate impacts accelerate – the
world is boiling, burning, flooding and melting – there is unprecedented
pressure on all companies to start taking their own role in the crisis far more
seriously.
This
pressure is translating into action. A record number of companies are making
climate pledges, but experts warn the pace of action remains glacially slow in
the face of a barreling climate crisis.
Even if all
current Paris agreement climate pledges are met, the world is still set to see
temperature rises of about 2.4C by the end of the century – well above the 1.5C
of warming that scientists say will already lead to severe climate impacts.
As
countries are under pressure to up their climate ambitions in the run-up to
Cop26, the vital UN climate talks in November, the private sector is also being
increasingly pushed by investors, employees, activists and consumers to take
meaningful action.
In
response, corporations have put out a flurry of climate commitments. At least a
fifth of the world’s 2,000 largest public companies have now made some kind of
“net zero” pledge to cancel out their carbon emissions. They are investing
billions in clean energy, moving to electric vehicles, pledging to halt
deforestation, and urging the US government to step up climate action.
Climate and energy commitments made by the largest US
companies
Tech
companies have perhaps some of the most far-reaching goals. Last year,
Microsoft pledged to be “carbon negative” by 2030, meaning it would remove more
carbon from the atmosphere than it emits. By 2050, it aims to have compensated
for all of its historical emissions through carbon removal projects.
Apple says
its products and supply chain will be carbon neutral by 2030 and Google has
committed to be powered exclusively by renewable energy by 2030 and claims it
has already wiped out its carbon footprint by offsetting emissions.
Most oil
companies are moving far more slowly. Shell, BP, Total and Equinor have
announced plans to reach “net zero” emissions by 2050, but few have commited to
halt fossil-fuel exploration. Some have gone much further and completely
transformed their business model: Danish firm Ørsted sold its oil and gas
business in 2017 and has now installed more than a quarter of the world’s
offshore wind capacity.
The
transport industry, responsible for around one-fifth of global CO2 emissions,
is gearing up for bolder climate pledges. GM Motors announced in January it
would be carbon neutral by 2040 and sell only zero emissions vehicles by 2035.
The aviation sector, which has been slow to make climate pledges, is
considering whether to set a goal of becoming net zero by 2050.
Large
numbers of companies, including consumer-facing firms such as Ikea, PepsiCo and
Levi’s, are also signing up to the Science-Based Targets initiative (SBTi),
which helps companies calculate emissions targets aligned with the Paris
agreement ambition of 1.5C. More companies have signed up in the first half of
2021 than in the whole of 2020, according to a Bloomberg report.
“A decade
ago, companies were setting these very incremental targets,” said Cynthia
Cummis, co-founder of the SBTi and director of private sector climate
mitigation at the World Resource Institute. “Now science-based target setting
is becoming standard practice.”
And it’s
having an impact. An SBTi analysis of 338 large companies with science-based
pledges found they had reduced combined emissions by 25% between 2015 and 2019.
Corporations
are losing the ability to “fudge the numbers” on climate policies, said Ketan
Joshi, an Oslo-based climate analyst who tracks company climate pledges.
“Companies are increasingly starting to understand that they’re losing their
grip on the public relations hit of announcing a climate ambition and then
doing nothing about it.”
There are
still big caveats.
Global
emissions are rebounding post-pandemic and 2023 is on track to see the highest
levels of CO2 emissions in human history, according to the International Energy
Agency.
Despite the
record number of corporate climate pledges, an analysis of 9,300 listed
companies from index provider MSCI published in July found that they are still
on course to exceed their “carbon budgets” – the total amount of emissions they
can release and still keep in line with 1.5C of warming – within the next six
years.
This
finding highlights the need for these companies to “dramatically accelerate
climate action”, said Remy Briand, head of environmental, social and governance
at MSCI. “It is easy to say that becoming net-zero is a high priority, but it
is another to take action, especially immediate action.”
While some
companies have placed climate change at the top of their agenda, he added,
others have made weak pledges or failed to act at all. “For those not matching
their commitments or lagging, there should be nowhere left to hide.”
Analyzing
what companies are actually doing, however, can be painstakingly difficult when
there is no requirement to disclose all key climate information and little
consistency in corporate pledges making it all but impossible to benchmark
progress.
The changes
required are so vast that many companies struggle to even articulate them. In
an evaluation of some of the world’s largest greenhouse gas emitters, the investor
engagement group Climate Action 100+ found no company has fully disclosed how
it plans to reach net zero.
With many
corporate net zero pledges still several decades out, often with few interim
targets, monitoring their effectiveness can be hard. “We cannot wait for 2050
to see whether we fulfil the commitments or not,” said Gonzalo Muñoz, UN high
champion on climate for Cop25. “It’s what we do today, and in these next five
to 10 years, that will determine whether we succeed or not.”
Emissions
gap between the current Paris climate agreement pledges and the pathway needed
for 1.5C
Figuring
out how to quickly cut emissions is not an easy task for companies, which must
work out not only how to reduce direct emissions and those from the energy that
they use (scope 1 and scope 2 emissions), but also those which come from the
use of their products (scope 3 emissions).
Some of the
boldest pledges rely on carbon removal technologies that don’t even exist yet,
or at least not at the scale required. Many more are heavily reliant on carbon
offsets, which allow companies to invest in “nature based” programs like tree
planting or forest protection to counteract their own emissions. Offset
projects, however, have been plagued by allegations of flawed accounting,
greenwash and sometimes even of actively fueling climate change.
These
climate pledges are also voluntary. To some, this shows that industry is trying
to take responsibility for its own emissions. For others, it looks more like an
effort at self regulation to avoid government intervention.
“I don’t
think we have time for voluntary corporate initiatives any more,” said Jennifer
Morgan, executive director of Greenpeace International. “We’ve done them for
decades and they haven’t worked. I think there’s a real need for governments to
be coming in and putting in place some legislative and regulatory frameworks.”
Many
companies have publicly called for governments to take stronger climate action;
behind the scenes it can be a different story.
Amazon and
Microsoft, for example, have been criticized for pitching themselves as climate
leaders while also donating tens of thousands of dollars to politicians who
oppose climate action. An Amazon spokesperson said it actively advocates for
clean energy policies and a spokesperson for Microsoft said that to make
progress the company “must engage with candidates and officeholders who hold a
range of views.”
If business leaders truly grasped the seriousness of
the crisis they would immediately pivot their entire business model
Jamie Beck Alexander, Project Drawdown
The
lobbying efforts of fossil fuel majors, meanwhile, are well documented. The
five largest publicly-traded oil and gas companies spent over $1bn on
misleading climate-related branding and lobbying in the three years following
the Paris agreement in 2015, according to a 2019 report by InfluenceMap.
A host of
investigations has revealed big fossil fuel companies knew about the link
between their products and climate change for decades but continued to argue
that climate science was uncertain and to push against climate action. Just
last month an Exxon lobbyist was caught on tape by investigative outlet
Unearthed describing how the company was actively working against key US
climate policies through lobbying and membership of trade associations.
These same
firms also encouraged a public narrative of individual responsibility for the
climate crisis. British Petroleum notoriously helped to popularize the term
“carbon footprint” with an online calculator that encouraged people to measure
their own emissions.
This focus
on personal responsibility is echoed in other sectors, which advertise “more
sustainable” products while continuing business-as-usual models of consumption
and production.
“The
discussion that moves us away from corporate responsibility to personal
responsibility is a huge distraction,” said Shannon Lloyd, an assistant
professor of management at Concordia University in Canada. “As an individual,
your choices have very little impact in terms of reducing the carbon or other
environmental footprint of products. It’s more about getting laws put in place
or policies in place than individual purchasing decisions.”
Reaching a
net zero world will entail “wholesale transformation” in both infrastructure
and how things are done, said Steven Clarke, director for corporate clean
energy leadership at non-profit Ceres. “Some people refer to it as on the scale
of a second industrial revolution.”
Certain key
sectors will face big challenges. There’s a lack of easy answers for some
energy-intensive industries with huge carbon footprints, such as steel, cement,
aviation and shipping, which are notoriously hard to decarbonize. Sectors which
rely on high consumption of products with big climate footprints, such as fast
fashion and meat, will also need to adapt significantly for the world to limit
temperature rise to 1.5C.
Sources of greenhouse gases by sector in the US
But there
is huge potential for innovation and action. Most solar and wind projects are
now expected to be cheaper than coal. Investment is flowing into “green
hydrogen”, which could provide zero-emissions fuel for ships and airplanes and
replace fossil fuels in steel manufacturing.
Meanwhile,
pressure on companies is intensifying. More than 1,500 lawsuits have been
brought against fossil fuel companies. This number could accelerate thanks to
advances in climate science making it easier to link climate damage to
corporate activity. Employees are another lever for change.
In 2020,
hundreds of Amazon workers criticized the company for climate inaction last
year. This year the non-profit ClimateVoice launched a campaign mobilizing
employees to demand that big tech companies spend more of their lobbying
dollars on climate policy.
Companies
cannot tackle the climate crisis by themselves, said Jamie Beck Alexander of
Project Drawdown, a non profit focused on climate solutions, “regulation will
absolutely be required to transform entire sectors.” But this doesn’t let them
off the hook, she added. “If business leaders truly grasped the seriousness of
this crisis, they would immediately pivot their entire business models and
resources toward scaling climate solutions full stop.”
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