Despite minor improvements, major companies’ climate commitments remain “critically insufficient” to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit), according to a new analysis.
The 2024 Corporate Climate Responsibility MonitorA report by European nonprofits Carbon Market Watch and NewClimate Institute finds that many of the world’s biggest companies are making better climate pledges — for example, by starting to move away from misleading “carbon neutrality” claims and agreeing quantitative targets for reducing emissions set. their net-zero promises.
But major problems remain. The report finds that 51 major companies’ climate plans will collectively reduce emissions by only about 30 percent below 2019 values by 2030 – far short of the 43 to 48 percent that scientists say the world needs to achieve to limit global warming to 1.5 degrees C . Most companies’ targets are still “ambiguous”, the report says, leaving out critical supply chain emissions and banking on dubious carbon offsets.
“We are seeing improvements from a very low baseline,” said Gilles Dufrasne, head of global carbon markets for Carbon Market Watch and a co-author of the report. “There is still a big gap between what they promise to deliver and what they actually deliver.”
The companies analyzed span four sectors – automotive, fashion, electric utilities and food and agriculture – and are responsible for around 16 percent of the world’s overall greenhouse gas emissions. Carbon Market Watch and the NewClimate Institute chose them because they have been among the most vocal about their climate efforts.
Thirty-one of the companies were included in previous versions of the Corporate Climate Responsibility Monitor, or CCRM. The first report, published in 2022, found that 25 companies’ “net zero” targets would reduce total emissions by only 40 percent. The report’s 2023 repeat raised similar concerns, describing two dozen companies’ climate commitments as “misleading” and “completely inadequate.”
This year’s report revisits those same companies’ net-zero targets and introduces 20 new ones, but its main focus is on their medium-term goals – stepping stones on the way to decarbonisation by 2050. Bodies like the United Nations High Level Expert Group and the International Organization for Standardization recommended interim targets so that companies (and governments) do not wait until the last minute to reduce their emissions.
Although the analysis finds improvements in 19 of the companies’ interim targets over the past two years, many of them still have the same flaws as the net-zero targets. Most importantly, they tend to mask emissions related to the transportation and production of materials that companies buy and the products they sell to consumers. These so-called “scope 3” emissions represent more than 90 percent of the companies’ collective climate footprint. However, firms including carmaker Toyota, commercial truck maker Daimler Truck, and British supermarket chain Tesco have reported no plans or only limited efforts to address it.
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Other companies’ pledges lean too heavily on land-based carbon credits and carbon sequestration projects, initiatives that seek to neutralize greenhouse gas emissions by avoiding them elsewhere — such as by protecting forests that would otherwise have been cut down — or by planting trees to suck carbon out of the air. . Such projects have a well-documented history of accounting problemsand the carbon they remove is often vulnerable to getting released again in the event of wildfires. Experts say carbon removal should only be used to offset the small fraction of global emissions from activities that are difficult to decarbonize, but the NewClimate Institute and Carbon Market Watch say companies are using credits and removals as alternatives to emissions reductions.
According to the report, only eight of the companies have 2030 emissions reduction targets that are of “high or reasonable integrity”. Only four of those firms – food companies Danone and Mars, Spanish electric utility Iberdrola and carmaker Volvo Group – back up their targets with concrete plans to actually achieve them. Other companies, such as mega-retailer Walmart, have not updated their 2030 targets for several years. Car company Volkswagen dropped its interim target for 2025 three years ago and has not announced a replacement.
John Reilly, a senior lecturer at MIT’s Sloan School of Management, said the report shows how companies may be too eager to align with science-based emissions reduction goals such as “net zero by 2050.” They agree to such goals “without giving much thought to how they would actually achieve them,” he said, adding that weaker but better motivated emissions targets may be preferable. “If these companies had very concrete, detailed plans to get even a 20 percent reduction by 2030, I would feel much more comfortable than vague commitments to get to 43 or 48 percent.”
According to Silke Mooldijk, a researcher from the NewClimate Institute and a co-author of the report, the problem is not a lack of clarity about what companies must do to decarbonize. “It’s very clear what measures they need to take,” she told reporters last week, citing basic steps such as setting a phase-out date for coal and oil-fired electricity generation and selling gasoline-powered cars. Rather, companies seem to be resisting radical transformations in favor of small steps and “creative accounting” that allow them to carry on as usual.
For example, the report praises clothing companies H&M and Inditex – which owns Zara – for setting transparent emission reduction targets that are of “moderate” integrity, but criticizes them for not proposing an alternative to the highly polluting fast-fashion business model. For food and agriculture, the report points to efforts by Nestlé to switch to renewable energy, but says the company is not doing enough to replace animal products with plant-based alternatives. Plans from other firms such as Kepco, an electric utility company, appear to use carbon capture to mitigate ongoing climate pollution, possibly justifying a delay in the transition to renewable power generation.
Of the 20 companies named in the report that Grist contacted for comment, six responded in time for publication. Nestlé said it disagreed with the report; A spokesman said the company was pursuing carbon dioxide removal as a complement to reducing its absolute emissions, a strategy based on recommendations from the Intergovernmental Panel on Climate Change. A Mars spokesman also objected to the report, saying the company’s net-zero target does not rely on controversial land-based carbon removal. (Carbon Market Watch and the NewClimate Institute said it was “unclear” whether that was the case.)
Daimler Truck, shoe giant Adidas, and H&M made public their existing climate plans and emissions, with the latter two highlighting new data for 2023 not included in the report. In 2023, Adidas said it had reduced greenhouse gas emissions by 24 percent from a 2019 baseline. H&M said it reduced scope 3 emissions by 22 percent.
Five of the companies expressed an ongoing commitment to reducing emissions and highlighted their alignment with the Science-Based Targets Initiative, or SBTi, a nonprofit that validates more than 4,000 private-sector climate targets. Indeed, many of the companies’ near-term climate targets match SBTi-approved pathways to limiting global warming to at least 2 degrees C (3.6 degrees F), even when the CCRM has rated them as “weak” or “very weak.”
Dufrasne acknowledged this inconsistency and said there was an urgent need for less flexibility on rating programs and stronger standards overall. “I think it’s pretty telling that companies don’t actually engage with the substance of the issues flagged in the report and just say, ‘It’s fine, we’re certified by SBTi,'” he told Grist.
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Dufrasne said he is concerned that SBTi and similar organizations may be relaxing their standards. Just last week, the SBTi’s board of trustees announced it would begin allowing companies to use carbon credits toward their annual scope 3 emissions targets, a move critics say could undermine real emissions reductions. Similarly, the Voluntary Carbon Markets Integrity Initiative, or VCMI – a body that provides guidance on the use of carbon credits – has a proposal last November that would allow companies to use carbon credits for up to 50 percent of their annual scope 3 emissions each year until 2035.
The VCMI says this approach will help companies “bridge the gap” between their advertised scope 3 emissions reduction targets and the reductions they actually achieve. But Carbon Market Watch and the NewClimate Institute’s modeling suggests it could “nullify” companies’ Scope 3 climate targets, allowing them to keep emissions steady or even increase them as long as they buy enough credits.
The VCMI did not respond to Grist’s request for comment. An SBTi spokesman did not address specific parts of the report, but said the organization was “urgent[s] all interested parties to contribute to the development of our standards through the public consultations.”
Jonathan Overpeck, dean of the University of Michigan’s School of the Environment and Sustainability, said the report points to a failure of the voluntary approach to corporate climate action. Companies must now “be more proactive in figuring out a better approach,” or risk a backlash from consumers and regulators.
“I like the idea of corporations … playing a role in tougher decarbonisation pathways,” Overpeck added, “but if they can’t do it, it will have to be forced on them.”
Benja Faecks, an expert on global carbon markets for Carbon Market Watch and a co-author of the report, offered some specific ways governments could intervene: by setting binding, sector-specific emission reduction targets; expanding carbon pricing and cap-and-trade systems to help reduce corporate emissions; and further limitation of misleading advertising about companies’ climate promises, especially around “carbon neutrality”. Earlier this year the European Union companies that are prohibited of labeling products as carbon neutral by 2026, but companies are still allowed to describe themselves as such.
“It does not make sense that Nestlé can say they are carbon neutral if they are not allowed to say they sell carbon neutral espresso machines,” Faecks told reporters last week.
