Companies such as Exxon Mobil have climate pledges that might look good on paper – but with no plan … [+]
Just a third of firms on the Forbes Global 2000 list of publicly traded companies have net zero emissions targets, and almost two thirds of those pledges fall far short on necessary detail, leaving major corporations open to accusations of greenwashing, a new report has concluded.
In its latest assessment of climate pledges from nations, regions and corporations, the Net Zero Tracker collaboration noted large year-on-year increases in the number of countries, cities and firms that have made promises to cut their greenhouse gas emissions. But looking more deeply, the researchers found key shortcomings in those promises—for example, in almost half of cases, corporations had merely stated an intention to cut their emissions to net zero, without explaining how.
Summarizing their findings, the authors stated: “In contrast to the near-universal coverage of country-level net zero targets, the volume and robustness of targets set by non-state actors is alarmingly weak and bound to face increasing scrutiny as UN, national and NGO-led accountability initiatives ramp up.”
Notably, the researchers found that companies responsible for high levels of emissions, such as oil firms, were more likely to have announced net zero targets. But only 38% of all companies analyzed said their emissions reductions would cover all “Scope 3” emissions. Scope 3 emissions include the emissions produced by the end use of a company’s product—a crucial factor when looking at the climate impact of companies that sell oil, gas and coal.
Thomas Hale, associate professor at the Blavatnik School of Government at the University of Oxford and one of the collaborators on the report, said: “Science-aligned net zero pathways are now the baseline expectation for countries, companies, cities, and regions. It’s insane that two-thirds of the largest companies have yet to set a target for a transition that is well underway.”
He added: “the increasingly glaring omissions raise the question of whether boards and management are doing their jobs.”
Among its findings, the report shows:
• 702 companies of the 2,000 firms on the Forbes Global 2000 now have net zero targets, up from 417 in December 2020.
• 65% of those 702 firms show “a troubling lack of clarity on essentials,” such as information about the greenhouse gases being measured, or how much the companies intend to rely on unreliable “carbon offsets” to meet their targets.
• The report welcomed a dramatic increase in the number of national laws and policies covering net zero targets. These went from covering 10% of national greenhouse gas emissions in December 2020 to covering 65% in June 2022.
• 900 large cities worldwide still have no net zero target. But the number of such cities with a target doubled, from 115 in 2020 to 235 now.
Richard Black, senior associate at the Energy & Climate Change Intelligence Unit and a collaborator on the report, said that in light of Russia’s invasion of Ukraine and the resultant skyrocketing gas prices, it was more important than ever that nations and regions double down on structured action to cut their reliance on fossil fuels.
“Ambitious interim targets are vital to delivering net zero and limiting cumulative emissions. But even leaving aside the climate emergency, the severe disruption to global fossil fuel supplies due to the Russian invasion demands that countries rapidly cut their dependency,” Black said. “Clear interim targets can be the solution to both the climate and energy crises; by providing the guardrails to accelerate the shift away from fossil fuels.”
Among the sectors represented in the Forbes Global 2000 list, fossil fuel companies had the second highest percentage of net zero targets, at 49% of firms. The report authors inferred from this that “reputation-conscious companies with large emissions footprints are more likely to set net zero targets that are symbolic in nature, without the detailed plans required to achieve them. Or at worst, they are flat-out greenwashing.”
The report comes at a time when environmental, social and governance (ESG) practices are under increasing scrutiny. In May, Tesla CEO Elon Musk derided ESG as “a scam” when the electric car company was dropped from S&P’s ESG index, while oil major Exxon Mobil placed in the top 10. The Net Zero Tracker report shows that while Exxon Mobil does have an annual greenhouse gas emissions and net zero reporting mechanism in place, none of its plans cover the gases released when the firm’s products are burned. And that’s not going to change any time soon: last month, Exxon Mobil’s board voted against a proposal to reduce the firm’s Scope 3 emissions.
Writing about S&P’s criteria, Tom Lyon, professor of Sustainable Science, Technology and Commerce and Business Economics at the University of Michigan, explained that ESG rankings of companies are only as good as the criteria used to assess them. As S&P’s ESG ratings do not account for Scope 3 emissions, Lyon said, “Tesla doesn’t get as much credit as it might, and Exxon doesn’t get penalized as much as it might.”
For its part, Tesla has so far failed to make even a net zero emissions pledge, and further does not report emissions from any of its activities.
The Net Zero Tracker report “Net Zero Stocktake 2022” can be viewed here.
Source: https://www.forbes.com/sites/davidrvetter/2022/06/13/forbes-global-2000-firms-judged-alarmingly-weak-on-climate-plans/