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“If the path to net zero was going to be easy, then why haven’t we done it already?”

The headline climate pledges of 25 of the world’s largest companies in reality only commit to reducing their emissions by 40% on average, not 100% as suggested by their “net zero” and “carbon neutral” claims, according to an analysis.

11th Feb 2022
By: William Poole-Wilson
| Read Time: 6 min
 - Will+Partners
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These are the findings of the Corporate Climate Responsibility Monitor released today (7 February), conducted by NewClimate Institute in collaboration with Carbon Market Watch. It evaluates 25 large companies – operating across different sectors and geographies – to determine the transparency and integrity of their headline climate goals.

Companies’ headline climate pledges require detailed evaluation and in most cases cannot be taken at face value, the report finds. Only one company’s net zero pledge was evaluated as having “reasonable integrity”; three with “moderate”, 10 with “low” and the remaining 12 were rated as having “very low” integrity.

We set out to uncover as many replicable good practices as possible, but we were frankly surprised and disappointed at the overall integrity of the companies’ claims. As pressure on companies to act on climate change rises, their ambitious-sounding headline claims all too often lack real substance, which can mislead both consumers and the regulators that are core to guiding their strategic direction. Even companies that are doing relatively well exaggerate their actions.

Thomas Day, NewClimate Institute

For the minority of the evaluated 25 firms, their headline promises serve as a useful long-term vision, and are substantiated by specific short term emission reduction targets. Although none of the pledges has a high degree of integrity overall, Maersk came out on top, with reasonable integrity, followed by Apple, Sony and Vodafone with moderate integrity.

But most companies with net zero or carbon neutrality pledges fail to put forward ambitious targets. Many company pledges are undermined by contentious plans to cut emissions elsewhere, hidden critical information and accounting tricks. Overall, the analysis finds the headline pledges of Amazon, Deutsche Telekom, Enel, GlaxoSmithKline, Google, Hitachi, IKEA, Vale, Volkswagen and Walmart have “low integrity” and those of Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.ON SE, JBS, Nestlé, Novartis, Saint-Gobain and Unilever have “very low integrity”.

The 13 companies that have backed their net zero headline pledges with explicit emission reduction commitments commit, on average, to reduce their full value chain emissions from 2019 by only 40%. The other 12 have no specific emissions reduction commitments for their net zero target year.

The headline goals of just three of the 25 companies – Maersk, Vodafone and Deutsche Telekom – clearly commit to deep decarbonisation of over 90% of their full value chain emissions. At least five of the companies would effectively only reduce their emissions by less than 15%, often by excluding downstream or upstream emissions in their value chain.

The exclusion of emission sources or market segments is a common issue that reduces the meaning of targets. Eight companies exclude upstream or downstream emissions in their value chain, which usually account for over 90% of the emissions under their control. E.ON may exclude market segments that account for more than 40% of its energy sales; Carrefour appears to exclude locations that account for over 80% of Carrefour-branded stores.

Offsetting approaches are also undermining integrity, says the report. Twenty-four of 25 companies are likely to rely on offsetting credits of varying quality. At least two-thirds of the firms rely on removals from forests and other biological activities, which can easily be reversed by, for example, a forest fire. Nestlé and Unilever distance themselves from the practise of offsetting at the level of the parent company, but allow and encourage their individual brands to pursue offsetting to sell carbon-neutral labelled products.

Some apparently ambitious targets may lead to little short-term action. It may be possible for CVS Health to achieve its 2030 emission reduction target with limited additional action, since the target is compared with a base year with extraordinarily high emissions. GlaxoSmithKline may delay the implementation of key emission reduction measures until 2028/2029, ahead of its 2030 target.

Gilles Dufrasne from Carbon Market Watch, said: “Misleading advertisements by companies have real impacts on consumers and policymakers. We’re fooled into believing that these companies are taking sufficient action, when the reality is far from it. Without more regulation, this will continue. We need governments and regulatory bodies to step up and put an end to this greenwashing trend.”

Promising examples of climate leadership were also identified. Google is developing tools to procure high-quality renewable energy in real time; this is being picked up by other companies. Maersk and Deutsche Post are investing in decarbonisation technologies for transport and logistics. There is still ample potential for companies to replicate and scale up these emerging best practices.

Companies must face the reality of a changing planet. What seemed acceptable a decade ago is no longer enough. Setting vague targets will get us nowhere without real action, and can be worse than doing nothing if it misleads the public. Countries have shown that we need a fresh start when adopting the Paris agreement, and companies need to reflect this in their own actions.

Gilles Dufrasne, Carbon Market Watch

Steve McGregor, group MD at property maintenance specialist, DMA Group, said: “We all knew the road to net zero was going to be a bumpy one. It’s a tough, but worthy commitment. Buildings with poor temperature controls, or older buildings with poor fabric or insulation face various hurdles. Older buildings pose particular challenges when it comes to sustainability. Retrofit, refurbishment and conversion all generate embodied carbon emissions so the number of materials used, the carbon content of these materials, and how retrofit is carried out must be carefully considered upon any project. The biggest contribution that real estate makes towards decarbonisation will come from improving these existing buildings, representing 80 per cent of the national estate use by 2050.”

He added: “Research in 2019 from Historic England’s The Heritage Counts also showed that demolishing a historic building and replacing it with a new building can result in greater carbon emissions by 2050. This is because of the associated embodied carbon. Reducing demand is a big practical step to take to reduce energy consumption. But while it might be disheartening to note some of the world’s biggest businesses are failing to live up to their net zero emissions targets, we should note that we have reduced CO2 in the UK by 30% in the past decade, and achieved a huge increase in general awareness. The ambition of delivering better homes and buildings, cleaner air, and unlocking investment remains in sight. But it will only be reached with thorough and genuine ambition.”

William Poole-Wilson, managing director of workplace design and strategy architects, Will+Partners, said: “If the path to net zero was going to be easy, then why haven’t we done it already? I think the reality is dawning on people on just how hard this journey is going to be. If it’s tough for organisations as large as Amazon and Ikea, then take a moment to think about how difficult it is going to be for smaller organisations. Why then are smaller organisations better at this?, and are they? You also have to ask; what is a 100% cut? It’s a bit of a tautology. You’re either getting rid of it, or you’re cutting it, but how much are you cutting it by? ”

“We must also look at the role-specific organisations are playing in carbon capture. Amazon, for example, could possibly be the new oil company. Are they the new super polluter? The amount of water that’s required to cool its data centres and the amount of energy to keep them running is vast. The entire process of a data centre is just a carbon emitter. Even if you ran them on clean energy, the amount of emissions that are pumped out in the process of what’s manufactured is pretty telling. I have been looking at this subject for 24-years and the significant change is that developers and politicians have joined architects on the stage, now we need real action and that means hard work to establish what to do. There are no silver bullets. Without all these people at the table, it’s impossible to achieve anything. The good news is they now are. But we need to move faster. Because it took us 24 years to get everyone around the table. We cannot afford to keep going at that pace.”

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