SINGAPORE (THE BUSINESS TIMES) - A corporate climate responsibility report has found that 25 of the world's largest companies have mostly failed their net-zero climate pledge tests, with ambiguous "net-zero" targets and limited commitments to reduce emissions.
According to findings of the Corporate Climate Responsibility Monitor released on Monday (Feb 7), the major multinational companies (MNCs) assessed in the report commit to reducing their emissions by only 40 per cent on average in reality, instead of 100 per cent as their net-zero and carbon-neutral claims suggest.
Just three of the 25 companies - Maersk, Vodafone and Deutsche Telekom - "clearly" commit to deep decarbonisation of over 90 per cent of their full value chain emissions, the report found.
For the 13 companies that backed their net-zero headline pledges with "explicit" emission-reduction commitments, this meant a commitment, on average, of reducing their full value chain emissions from 2019 by only 40 per cent. The other 12 companies assessed have no specific emissions-reduction commitments for their net-zero target year, the report added.
At least five of the companies would effectively reduce their emissions by only less than 15 per cent, often by excluding downstream or upstream emissions in their value chain. Such exclusion of emission sources or market segments is a common issue that reduces the meaning of targets, said the report.
The Corporate Climate Responsibility Monitor is conducted by NewClimate Institute in collaboration with Carbon Market Watch. It evaluates 25 major companies - operating across different sectors and geographies - to determine the transparency and integrity of their headline climate pledges.
The report highlighted that headline climate pledges by companies, in most cases, cannot be taken at face value, and companies must be subject to scrutiny and regulation.
Only one company's (Maersk) net-zero pledge was evaluated as having "reasonable" integrity, while three (Apple, Sony and Vodafone) was rated as "moderate".
Ten companies (Amazon, Deutsche Telekom, Enel, GlaxoSmithKline, Google, Hitachi, Ikea, Vale, Volkswagen and Walmart) had their headline climate pledges rated as having "low" integrity.
Lastly, the remaining 11 (Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.ON, JBS, Nestlé, Novartis, Saint-Gobain and Unilever) were rated as having "very low" integrity.
The majority of the companies with net-zero or carbon neutrality pledges also failed to put forward ambitious targets, according to the report. "Many company pledges are undermined by contentious plans to reduce emissions elsewhere, hidden critical information and accounting tricks," it stated.
Mr Thomas Day of NewClimate Institute, a lead author of the study, said the team had set out to uncover as many replicable good practices as possible, but were "surprised and disappointed" at the overall integrity of the companies' claims.
"As pressure on companies to act on climate change rises, their ambitious-sounding headline claims all too often lack real substance, which can mislead both consumers and the regulators that are core to guiding their strategic direction. Even companies that are doing relatively well exaggerate their actions," he said.