Global Companies’ Climate Strategies Face Scrutiny in New Report

The NewClimate Institute’s second annual report once again highlights the shortcomings of the world’s largest multinational companies in doing their part to fight climate change.

The report finds that many companies must catch up on their climate pledges and commitments to halve global emissions by 2030.

The 2022 IPCC report shows that limiting warming to around 1.5°C (2.7°F) requires slashing GHG emissions by half by 2023 to avoid the worst consequences of climate change. Examining these companies’ climate pledges in terms of the data and facts is crucial. It should be welcomed as their response to increasing calls from a range of stakeholders to take responsibility for the impact of their activities.

The CCRM 2023 report, “Assessing the Transparency and Integrity of Companies’ Emissions Reduction and Net-Zero Targets,” evaluates the climate strategies of 24 major global companies that have endorsed the Paris Agreement in limiting warming to 1.5°C. These companies have reported combined revenues of USD 3.16 trillion in 2021, representing 10% of the total revenue from the world’s largest 500 companies. Emissions of these 24 multinational companies accounted for 4% of the total global emission in 2019.

The report assesses the integrity and transparency of their corporation climate actions in four main areas:

• Tracking and disclosure of emissions
• Setting emission reduction targets
• Reducing own emissions, and  
• Climate contributions and offsetting claims

Key insights from the report include:

Most companies’ climate strategies are mired by ambiguous commitments, offsetting plans that need more credibility. The report says that the climate strategies of 15 of the 24 companies are of low or very low integrity. Most companies’ strategies do not represent good practice and climate leadership examples.

There is a critical need to shift attention to the 2030 blind spot. Companies’ climate pledges for 2030 fall well short of the required ambition and must be more appropriately verified. Nearly all the 24 companies’ 2030 targets cannot be taken at face value. Many of them only target reducing their scope 1 and 2 emissions, and not enough of scope 3, which accounts for 90% of the emissions for most companies assessed. Other companies’ 2030 targets are misleading due to reliance on offsetting.

Only a minority of net-zero pledges represent credible commitments to deep decarbonisation, while many remain highly ambiguous. Five of the 24 companies – H&M Group, Holcim, Stellantis, Maersk, and ThyssenKrupp– commit to decarbonising their emissions by at least around 90% by their respective net-zero target years. However, the long-term targets of 17 companies are of poor integrity due to the inadequacy or complete lack of explicit emission reduction commitments alongside ambiguous net-zero pledges.

Transparency and integrity of carbon neutrality claims remain critically low. Half of the 24 companies assessed made some form of carbon neutrality claim in 2021 and 2022. The integrity of all those claims could be better and compromised by various issues, including the scope coverage and the quality of the carbon credits procured.

The average neutrality claims of these companies only cover 3% of their emission footprint. Offsetting projects that companies select are highly contentious as they are neither additional nor likely to result in permanent emission removals.

To read the entire report, please refer to the link in the “Source” section below.