Are the carbon neutrality plans announced and drawn up by the world’s largest companies credible? This is the question that the second edition of the Corporate Climate Responsibility Monitor attempts to answer. This study analyzes and assesses the integrity of the ecological strategies of 24 international companies, including Carrefour, ArcelorMittal and Stellantis, but also Google, Amazon and the H & M Group. Industrial giants who regularly highlight their green initiatives through major communication campaigns. While some of them appear to be good students, even pioneers in some cases (Google or Maersk), others are scolded for the weakness of their initiatives. The Carrefour distributor and the industrial Nestlé are thus accused of leading an “ambiguous” and sometimes non-existent policy, mainly on the issue of reducing greenhouse gas (GHG) emissions. “The carbon neutrality promises of these 24 companies which boast of their climate credentials are often misleading”, denounce the authors of the study.
Published on Monday, February 13 by the New Climate Institute in collaboration with Carbon Market Watch, the text points to the insufficient efforts made by these groups to achieve carbon neutrality. “The commitments of the large companies analyzed in terms of climate are less than half of what it would take by 2030 to remain in the nails of the Paris Agreement, estimate the authors of the report. Long-term commitments corporate carbon neutrality plans serve to distract from the urgent need to reduce emissions in this decade.”
Reductions in CO2 emissions promised but insufficient
Among the 24 companies studied, a majority have set themselves the goal of achieving carbon neutrality by a specific date, often by 2030. But few are on the path to success. “Half of the companies we assessed make carbon neutrality claims today, but these claims only cover 3% of their emissions, on average,” the study notes. According to the analyses, only five out of 24 are seriously committed to carbon neutrality. The others don’t provide any evidence or plans to show that they are on this path. According to the observations of the two NGOs, the French distributor Carrefour, already singled out in 2022 by the same report, has not shown significant progress in the context of its climate policy to reduce its CO2 emissions.
The authors of the study also point out that “measures to reduce CO2 emissions are the backbone of an ambitious corporate climate policy”. However, these prove to be insufficient. “Most companies describe their plans at length on paper, but most plans lack detailed information and concrete commitments.” Only three companies out of 24 provide it. For example in the clothing sector, Fast Retailing, the H&M group and Inditex all three commit to using “more sustainable” materials, but without explaining which ones, nor detailing their way of getting there.
Neutrality policies “with ambiguities”
“By making such outlandish claims about carbon neutrality, these companies are not only misleading consumers and investors, but they are also exposing themselves to increased legal liability,” says Lindsay Otis, carbon markets expert for the NGO Carbon Market Watch. “They should instead implement ambitious climate plans to reduce their own emissions, while financing actions outside their own activities, without claiming that this gives them certain carbon neutrality”. And for good reason: while 22 of the 24 companies describe their measures with a “moderate” level of detail, in almost all cases it remains difficult to know on what scale the measures are implemented, and what share of the gas emissions current greenhouse they are aiming for.
The study also highlights that the vast majority of GHG emission sources are not taken into account by companies’ reduction policies. On this point, the report does not spare the French distributor Carrefour, present in nearly 40 countries. Besides the fact that its public declaration of CO2 emissions seems to exclude 98% of its total carbon footprint, the target measures supposed to allow their reduction concern only 20% of all Carrefour stores. For the French company, which prides itself on wanting to achieve carbon neutrality by 2040, the authors of the study actually predict that its commitments will end ultimately by reducing its emissions by less than 1%. The same goes for Nestlé, which is aiming for a 50% reduction in its emissions by 2050, but whose study only foresees, for the time being, a reduction of 16% to 21%. Like Carrefour, the Swiss industrialist seems to exclude many sources of emissions from its calculations.
Misleading compensation mechanisms
Besides the issue of reducing CO2 emissions, other mechanisms can be used by companies to improve their footprint. This is the case of external compensation systems (for projects aiming for carbon neutrality not directly or indirectly related to their activity) or internal (for projects aiming for carbon neutrality directly in the company’s value chain). But the study warns about this type of project, some companies tend to communicate intensely on them – without tangible results. According to the study, three-quarters of the companies assessed rely heavily on offsetting through projects related to reforestation and land use. “A problematic practice,” write the authors. Because by relying on these compensation mechanisms, companies would focus less on their CO2 emissions to be neutralized.
While the 2023 report from the New Climate Institute is not very encouraging, some companies are showing goodwill and innovating to transform their sectors. This is the case of the carrier Maersk, which is investing in alternative fuels, or the German DHL, which is investing in the electrification of its fleet and the intensification of the production of low-carbon fuels for transport. road, sea and air.