World's Largest Companies Are Failing On Climate Action, New Report Shows A heavy reliance on carbon offsetting helps companies shirk accountability for a majority of their emissions.
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The Corporate Climate Responsibility Monitor (CCRM) 2024 released by non-profit New Climate Institute, assessed climate targets put forth by 51 of the world's largest companies.
These 51 companies had a collective revenue of USD 6.1 trillion in 2022 and self-reported greenhouse gases (GHG) emissions of 8.8 Gigatonnes of CO2 equivalent in the same year — roughly equal to the total annual GHG emissions of India, Russia, and Brazil combined. That is 16 per cent of global GHG emissions in 2022.
According to the report, major companies' net-zero targets were mostly ambiguous and lacked commitments to reducing emissions. The collective ambition of companies to reduce emissions by 2030 fell far short of the requirements to be aligned with 1.5°C compatible pathways.
The 51 companies together are set to reduce emissions by only 30 per cent, compared to 2019 levels. Moreover, only seven companies have targets poised to reduce their emissions more than 50 per cent by 2030.
The Corporate Climate Responsibility Monitor (CCRM) 2024 also evaluates the approach taken by companies to meet their targets and the transparency of their progress. The result of this is an Integrity score on a 5-point scale ranging from "High" to "Very Poor". In this year's assessment, not a single company was classified under High Integrity.
Danone, Ibendrola, Mars, and Volvo Group were identified to have reasonably good emission reduction plans. Conversely, H&M, Nike and Inditex were seen to be lacking in plans to achieve their targets. Walmart has not updated its targets since setting them in 2016 while Volkswagen dropped its interim 2025 target and has not replaced it yet.
Along with this, the report finds that many countries depend on contentious solutions to meet their targets. These include carbon capture, utilisation and storage, transitional fuels, bioenergy and carbon dioxide removals. Altogether, while companies are slowly progressing on their climate targets, they are not on track to achieving the emissions reduction required to limit global temperature rise to 1.5 degrees Celsius (°C).
Over Reliance On Voluntary Reporting
The climate targets set by companies are voluntary. These are then assessed under validation frameworks led by standard setting bodies who determine whether the targets and efforts are robust. This certification lends legitimacy to company targets. Examples of validator bodies include SBTi, Transition Pathways Initiative and MSCI Net Zero Tracker. While the SBTi remains the largest validator of corporate climate targets, limitations of its framework have been voiced.
Maintaining a voluntary ecosystem to encourage companies to set out emission reduction targets has proved useful, with reports stating that more than 1,000 companies have outlined plans. However, when it comes to progressing towards these targets and holding accountability, this system has obvious gaps. For starters, there is no direction on identifying baselines for emission reduction. Many companies have announced ambitious targets, voiced their support of a low-carbon world and then either backtracked or silently abandoned them. The SBTi recently removed hundreds of companies including Microsoft and Unilever from its database for failing to update their plans. However, beyond bad press, there is little consequence for failing to meet a target.
The CCRM opines that in this critical decade, we may have overshot the importance of voluntary climate pledges from companies. A more stringent accountability system for corporations is needed for targets to translate into true emissions reduction from private corporations.
