A new report investigating the climate pledges of some of the world’s wealthiest companies is likely to prove useful reading for many in the health sector.
Melissa Sweet writes:
Big companies that claim to be at the forefront of climate action are not living up to their promises and need to face greater pressure from regulators, a new analysis finds.
The Corporate Climate Responsibility Monitor 2023, which evaluates the transparency and integrity of the climate pledges of 24 major global companies that put themselves forward as climate leaders, finds that:
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, published by not-for-profit organisations NewClimate Institute and Carbon Market Watch, said the rapid acceleration of corporate climate pledges, combined with the fragmentation of approaches, means it is more difficult than ever to distinguish between real climate leadership and unsubstantiated greenwashing.
“This is compounded by a general lack of regulatory oversight at international, national and sectoral levels,” says the report.
“Identifying and promoting real climate leadership, and sorting it from greenwashing, is a key challenge that, where addressed, has the potential to unlock greater global climate change mitigation ambition.”
The report may be of interest and use to many in the health sector as services and organisations work towards decarbonising, providing insights into both best and worst practice in methodologies and reporting.
Of particular interest for the health sector is the performance of two giant food and beverage companies, Nestlé and PepsiCo, whose power and products have such a profound impact on global health. Both rated poorly.
The report found the climate strategies of 15 of the 24 companies to be of low or very low integrity. Only five of 24 companies’ net-zero pledges represent a commitment to deep decarbonisation.
Companies’ climate change commitments do not add up to what their pledges might suggest and their combined emission reduction commitments are wholly insufficient to align with 1.5°C-compatible decarbonisation trajectories; targets and potential offsetting plans remain ambiguous; and the exclusion of emission scopes severely undermines the targets of several companies.
The report found that emissions disclosure practices are more encouraging with most companies’ disclosure having “at least a moderate level of transparency”.
“We also found examples of companies with credible decarbonisation commitments, and companies taking proactive and innovative action to reduce GHG [greenhouse gas] emissions, but these good practice examples represent a minority.”
While there had been a number of important developments in the guidelines and governance of corporate climate strategies since the report’s previous edition, the 10 companies analysed for the previous report showed “only limited signs of improvement in the transparency or integrity of some companies’ strategies, while many of the key issues previously highlighted persist”.
Similar concerns about corporate greenwashing were raised in a report released at the COP27 meeting in Egypt last year, ‘Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions’, which sought to provide a roadmap to prevent net zero from being undermined by false claims, ambiguity and “greenwash”.
As Croakey reported at the time, that report urged governments to introduce tough, transparent regulatory regimes to stop greenwashing by businesses, financial institutions and other entities making net zero promises that do not stack up.
The report also found that companies’ planned reliance on forestry- and land-related offsets outstrips the technical potential of the world’s natural resources and is fundamentally flawed due to the non-permanence of biological carbon sinks.
At least three-quarters of the 24 sampled companies rely on forestry and land-use related offsets. The demand for such carbon dioxide removals would exceed the potential of the world’s natural resource base by around 2–4 times, if these practices were replicated by other companies.
Moreover, these plans demonstrate the widespread lack of awareness that the biological storage of carbon is fundamentally unsuitable for offsetting claims due to the non-permanence of the climate impact.
The report also raises concerns about a growing focus on ‘insetting’, which it describes as a business-driven concept with no universally accepted definition. Several companies are advocating for ‘insetting’ as an alternative to offsetting, but the insetting measures the report identified “amount de facto to the unregulated offsetting of emissions, usually through biological carbon dioxide removals within the value chain”.
The report says this “illegitimate concept” has gained considerable traction over the past year, and its potential to significantly undermine corporate strategies is already being realised. Nestlé, PepsiCo, JBS and Deutsche Post DHL already employ ‘insetting’ today or plan for it to be a significant component of future pledges to illegitimately claim that their emissions have been or will be offset.
The report says that 2023 “must be the year for regulators, companies and voluntary initiatives to align with the solidifying consensus on what constitutes good practice for corporate climate responsibility”.
“Companies must play a central role in finding and scaling up solutions for deep decarbonisation, but their efforts need urgent acceleration and appropriate regulatory frameworks,” the report says.
“The findings of this report indicate that regulators cannot rely on consumer and shareholder pressure to drive corporate action, nor can they rely on existing voluntary initiatives to ensure compliance with the necessary standards for credible and transparent corporate climate action.”
The report says it is no longer sufficient for companies to only address their own direct emissions; rather, companies now need to address upstream and downstream emissions as well.
It is no longer good practice for a company to compensate for emissions by reducing or removing emissions elsewhere; rather, emission reductions and removals ‘elsewhere’ need to be enhanced in parallel to the company’s emission reductions, to reach global net zero.
“A new mindset and evaluation standard for companies is emerging,” says the report.
“While in the Kyoto era only some countries were required to act, companies now need to ask themselves: ‘Would we reach global net-zero emissions if all would do what we are doing?'”
It’s also a useful question for the health sector to consider.
Renew Economy: Not-Zero: Report finds rampant greenwashing among richest global corporations
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