Most companies continue to fall short of the economy-wide emission reductions required to limit global warming to below 1.5 °C, study finds.
This is the message of the latest report by the NewClimate Institute and Carbon Market Watch, which looks to evaluate the transparency and integrity of climate pledges of major companies across different sectors and geographies.
Now in its third iteration, the Corporate Climate Responsibility Monitor (CCRM) assessed the climate strategies of 51 companies to determine their alignment with the ambitious climate goals needed to limit global warming to 1.5 °C by 2050.
According to the report, there is a gap between the companies’ current commitments and the emissions reductions needed to meet the 1.5 °C target outlined by the Intergovernmental Panel on Climate Change (IPCC) in its 2022 report.
For example, the average emission reduction target across the value chains of these 51 companies’ sat around 30%, falling short of the IPCC’s recommendation of 48% for the same timeframe.
While 19 companies had strengthened their targets in the past two years, the report identified limitations in the comprehensiveness and rigour of some goals, such as being tied to only part of their business or relying on offsets instead of cutting emissions, leading to effective targets of only 5%-20%.
The report categorised the companies based on the perceived integrity of their targets. Companies including Enel, and Iberdrola’s targets were categorised as having ‘reasonable integrity’ due to the quality and credibility of their approaches.
Mars, H&M Group, were recognised for setting more ambitious targets (50-64% reduction), but fall under the ‘moderate integrity’ category due to the ambiguous implementation or only committing to limited emission reductions.
Strategies from other companies, including Adidas, Tesco, and Walmart, were considered ‘low integrity’ establishing targets in the 5-20% reduction range and classified as having lower perceived integrity due to the more limited scope of reductions.
“Four years into the critical decade for action on climate change, some companies have understood the need to set 2030 targets that are aligned with the latest climate science and substantiated by credible measures to achieve them,” said Frederic Hans from NewClimate Institute.
“However, there still is a concerning lack of commitment and urgency from too many companies to undertake credible climate action.”
The report examines the role of corporate target validators, such as the Science-Based Target Initiative (SBTi), which is says ‘plays a critical role’ in target and corporate strategy. However, it notes a ‘significant degree of leniency’ in its current practices.
Suggesting there is room for growth, the CCRM offers several solutions which would strengthen the validation process as a whole. One suggestion involves increasing the frequency of validation cycles, this would ensure the process remains current with the latest scientific advancements.
Additionally, they propose developing methodologies to specifically address Scope 3 emissions, a crucial aspect of the value chain often overlooked.
Finally, the CCRM emphasises the importance of transparency. They recommend disclosing the underlying data and methods used in each validation, alongside clear communication of any limitations affecting current assessments.
“We need 2024 to be the year where incrementalism is cast off. The policy is unequivocal: three quarters of national-level net zero targets are already enshrined in law or policy,” said Catherine McKenna, Chair of the UN Secretary-General’s High-level Expert Group on Net-Zero Commitments.
“The economics is exponential: $1.7 trillion was invested in clean energy in 2023, 65% more than into fossil fuels.”
