There are a lot of corporate climate pledges out there, and it’s easy to be cynical about them.
I get it. We’ve been fed so many unsubstantiated claims (for example, on airline carbon offsets) and so much outright disinformation (oil companies, I’m looking at you) that it would be easy to just dismiss them all.
Here’s why that would be bad, and what you should know about those big promises. It’s important because global business leaders will gather Sunday in Davos, Switzerland, for the annual World Economic Forum. It’s very likely that we’ll hear more climate promises.
First, let’s talk about greenwashing — a blanket term to describe false or unproven claims in a company’s environmental records. It’s a big problem. The New Climate Institute, a research organization based in Germany, recently looked at the climate plans of 25 big multinationals and gave most of them very low marks on actually reducing emissions. The group’s report said it’s “more difficult than ever” to distinguish between real climate leadership and dubious claims.
But, it’s very important to keep in mind that some companies are trying to do the right thing. CDP, a nonprofit group focused on corporate transparency, has identified more than 250 companies that it says are leading the way to a greener future. You can think of these businesses as trailblazers, and, if we fail to recognize their efforts, they’ll have less incentive to do the hard work of actually reducing greenhouse gas emissions.
The ground rules for corporate pledges are still being written. And regulators are increasingly focused on the issue. The United States Securities and Exchange Commission, for example, will meet on Wednesday to consider new rules that would standardize the way businesses disclose information about investments that claim to be green, sustainable or low-carbon.
In the meantime, here are some key points about what it takes for climate pledges to be credible. Keep them in mind the next time you read about a corporate announcement.
First things first: What do companies mean by net zero?
Becoming carbon neutral involves two things: Companies need to decarbonize their business by lowering their emissions, and then compensate for the unavoidable emissions through carbon offset programs like reforestation projects and carbon removal technologies.
But, for now, compensating for emissions is often a gamble. Forests that form the basis for carbon offsets are complicated because those forests can burn, releasing their stored carbon into the air and defeating the idea of an offset. In addition, most of the technologies to remove carbon that’s already in the atmosphere are prohibitively expensive and not in use on any commercial scale.
These uncertainties mean carbon offsets should be marginal in corporate plans, according to the standards set by Science Based Targets, a nonprofit group that assesses corporate goals. Most companies will only be able to rely on these tools to offset 10 percent of their emissions at most.
Some companies, like the ones in the fossil fuel sector, will need to radically change the core of their business models. There is no workaround.
What are companies doing until 2050?
Most pledges have 2050 as their target date. That’s because of the scientific consensus that, if the world can stop adding carbon dioxide to the atmosphere by then, we should be able to hold warming to 1.5 degrees Celsius. Beyond that level, the dangers of global warming — including worsening floods, droughts, wildfires and ecosystem collapse — grow considerably.
But it’s a long way to 2050. Experts say any credible pledge should have short- and medium-term targets, too, for every five or ten years. Pratima Divgi, who heads the capital markets department for CDP North America, said interim targets were useful for many reasons, not just measuring performance.
“In some cases, it’s about understanding why certain strategies that you’re using may or may not be working,” she said.
Setting and working through targets transparently is also key for shareholders and civil society to assess progress.
What are companies including in their targets?
The largest share of emissions tied to a company’s business most likely happen somewhere outside that company. For example, extracting the raw materials needed to manufacture a product. Or, home delivery.
Take JBS, the world’s largest meatpacker. Emissions from their offices and slaughterhouses are only 3 percent of their total emissions. The rest are tied to the thousands of farms that supply them with cattle, according to a recent analysis by the Institute of Agriculture and Trade Policy, a research organization based in Minnesota.
For banks, the difference is even more striking. Emissions from their portfolios are, on average, 700 times greater than their own, a recent study found.
According to Divgi, emissions tied to supply chains are, on average, more than 11 times greater than the operational emissions of a company. Any net-zero pledge that doesn’t include these emissions may not be credible.
What are companies doing when we’re not looking?
OK, so a company’s emissions balance sheet checks out. Is that enough? Not necessarily. Its impact on our planet’s climate can go well beyond its business, into the complex realm of politics.
It’s not uncommon for companies making bold announcements to be lobbying against climate action at the same time. This is also considered a form of greenwashing.
Last year, a watchdog group called Accountable.US found major corporations that had expressed deep concern over climate change were also backing business groups fighting climate legislation.
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From outside The Times
Before you go: Do airline climate offsets really work?
The idea of carbon offsets for flights is pretty appealing. Airline programs promise that, for a trivial amount of money, you can go about your travels with no climate guilt. But if it sounds too good to be true, that’s because, at least for now, it is. Read our full article to find out why.
Thanks for reading. We’ll be back on Tuesday.
Claire O’Neill and Douglas Alteen contributed to Climate Forward.
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