Climate pledges of leading companies misleading, insufficient: Report

The climate strategies of 24 of the worlds’ largest climate leader companies are wholly insufficient and mired by ambiguity,

Long-term net-zero pledges distract from the fact that climate pledges for 2030 go less than halfway to what is required to stay below the 1.5°C temperature limit, according to a recently published report by New Climate Institute in collaboration with Carbon Market Watch on “Corporate Climate Responsibility Monitor”.

The report assessed the integrity of the climate strategies of 24 major global companies that are prominently highlighting their climate leadership credentials, said a press statement.

The report found that the companies commit to reduce just 15% of their full value chain emissions by 2030, or up to 21% under the most optimistic interpretation of their pledges. This goes less than halfway to the 43% reduction in greenhouse gases that need to deliver at the global level to limit temperature rise to around 1.5°C.

As in 2022, Maersk is the only company whose climate strategy integrity was rated as reasonable. The report found that the strategies of eight companies – Apple, ArcelorMittal, Google, H&M Group, Holcim, Microsoft, Stellantis and Thyssenkrupp – to have a moderate level of integrity, while the remaining fifteen companies have low or very low integrity.

One of the report’s authors, Thomas Day of New Climate Institute, said, “In this critical decade for climate action, companies’ current plans do not reflect the necessary urgency for emission reductions. Regulators, voluntary initiatives and companies must place a renewed and urgent focus on the integrity of companies’ emission reduction plans up to 2030. The discourse on longer-term net zero should not distract from the immediate task at hand.”

Beyond 2030, the net-zero pledges of these 24 companies touting their climate credentials are often misleading, said the report, adding that the companies all claim to be on a pathway to ‘net zero’ or ‘climate neutrality’, which most observers would understand as a commitment to deep decarbonisation towards near-zero emissions.

Consensus in the scientific community – reflected in the likes of the SBTi Net Zero Standard and ISO Net Zero Guidelines – shows that delivering global ‘net zero’ requires cuts in today's emissions levels of at least 90%, or 95%, for most sectors. But the report found, that the commitments made by the companies amount to just a 36% reduction in their combined GHG emission footprint, by their respective net-zero target years. This demonstrates a huge chasm between what the companies are currently committing to and what is needed to avert the most damaging impacts of climate change.

A small minority of companies – including Maersk and Stellantis – are making potentially credible commitments for deep decarbonization towards 2030 and beyond.

A key concern is that offsetting practices – are undermining targets and misleading consumers. Half of the companies– including Apple, Deutsche Post DHL, Google and Microsoft – make carbon neutrality claims today, but these claims only cover 3% of those companies’ emissions on average. The vast majority of emission sources are excluded from these claims, but this critical information is not clear in the marketing materials displayed to consumers.

"By making such outlandish carbon neutrality claims, these corporations are not only misleading consumers and investors, but they are also exposing themselves to increasing legal and reputational liability” said Lindsay Otis, policy expert on carbon markets at Carbon Market Watch. “Instead, they should implement ambitious climate plans to reduce their own emissions, while financing action outside of their own activities, without claiming that this makes them carbon neutral.”

But most companies present measures that focus on incremental improvements at best, shying away from the necessary sector transformations. These alone are not nearly sufficient in sectors where 1.5°C-aligned trajectories require more transformative changes. The largest and most influential companies in the world must take the necessary steps to accompany the bold claims that they are making and understand the time has lapsed for marginal first steps.