Carbon Market Watch finds heavy reliance on offsets
Many of the net-zero pledges made by the biggest companies in the world are highly misleading, according to a report from Carbon Market Watch.
The non-profit recently examined pledges and progress among 24 large corporations, finding that on average, their net-zero commitments translate to only a 36% reduction in their greenhouse gas emissions by the target years they set.
Additionally, businesses want to offset a much bigger chunk of their emissions than is practical for meaningfully addressing climate change. All but one of the companies studied in the report plans to rely heavily on carbon offsets, with the range being 23% to 45% of emissions being offset by their target net-zero years, according to Carbon Market Watch. Meanwhile, standards from the Science-Based Targets initiative and ISO Net Zero Guidelines only allow offsets to apply to 10% and 5% of emissions, respectively.
“Just five out of the 24 companies – H&M Group, Holcim, Stellantis, Maersk and Thyssenkrupp – commit to decarbonise their emissions by at least around 90% by their respective net-zero target years,” the report read.
“We find the long-term targets of 17 companies to be of poor integrity, due to the inadequacy or complete lack of explicit emission reduction commitments alongside ambiguous net-zero pledges.”
The companies with the worst ratings – “very low integrity” – are American Airlines, Carrefour, JBS and Samsung Electronics. Those in the slightly higher category of “low integrity” include Ahold Delhaize, Amazon, Deutsche Post DHL, Fast Retailing, Foxconn, Inditex, Mercedes-Benz, Nestle, PepsiCo, Volkswagen and Walmart.
Those with ratings of “moderate integrity” include Apple, Arcelor Mittal, Google, H&M Group, Holcim, Microsoft, Stellantis and Thyssenkrupp. The only company with a “reasonable integrity” rating was Maersk. Carbon Market Watch did not give any of the companies it examined a “high integrity” rating.
The report includes assessments of transparency and integrity across four categories: tracking and disclosure; setting targets; reducing a company’s own emissions; and climate contributions and offsetting claims. The firms studied in the report represented $3.16trn in revenue in 2021, or about 10% of the revenue of the biggest 500 companies globally.
The companies in the report were included because they are part of the Race to Zero campaign. Carbon Market Watch picked the largest three companies in each of eight sectors with high levels of emissions.
“Most companies’ climate strategies are mired by ambiguous commitments, offsetting plans that lack credibility and emission scope exclusions, but replicable good practice can be identified from a minority,” the report stated.
Beyond the 36% in emissions reductions the companies set for their target years, 40% of the emissions in their pledges have “ambiguous targets where the role for emissions reductions and offsetting are unclear,” Carbon Market Watch stated. Another 5% of the total emissions are offsetting plans, and an additional 19% are emissions that companies have excluded from the scope coverage of their targets, according to the report.