Companies have been volunteering in droves to cut their greenhouse gas emissions to “net zero” within the next two to three decades.
Yes, goal: A lack of a standard definition of what “net zero” actually means for corporations — and the absence of a regulatory entity that can enforce the pledges — means investors, government officials and consumers are unable to discern greenwashing from genuine commitments.
Companies have been volunteering in droves to cut their greenhouse gas emissions to “net zero” within the next two to three decades.
Yes, goal: A lack of a standard definition of what “net zero” actually means for corporations — and the absence of a regulatory entity that can enforce the pledges — means investors, government officials and consumers are unable to discern greenwashing from genuine commitments.
- In broad terms, “net zero” means the point at which the emissions from an entity, be it a company or a country, equals the amount of greenhouse gases being taken out of the atmosphere.
By the numbers: At least 695 of the world’s largest publicly traded firms have set such targets as of early 2022 to be reached in gold before 2050.
- Companies are responding to the increasingly clear and dangerous effects of climate change, which in many cases are directly affecting their operations.
- The C-suites of these companies are also motivated by consumer sentiment and investor pressure, along with the knowledge that regulators are likely to act on this issue in the near future.
The big picture: The most recent UN Intergovernmental Panel on Climate Change reports show that globally, the net zero goal needs to be reached by 2050 in order to limit warming to 1.5°C above preindustrial levels — the target needed to prevent the most catastrophic effects of climate change.
- In the past few years, culminating with the COP26 climate summit in Glasgow late last year, companies have latched onto this goal just as countries have.
- “Net Zero is an attractively clear and simple tagline,” Steve Smith, the executive director of the Oxford Net Zero Initiative, which evaluates individual companies’ targets and their progress toward meeting them, told Axios. “Zero is a nice round number. Net Zero is is catchy.”
- But reports on the corporate sector’s emissions targets indicate that much more progress needs to be made for net zero targets to be met.
Between the lines: While the definition of net zero is clear on a global level, for an organization it can be murkier.
- For example, Smith said, the lack of a formal definition means it’s not clear whether net zero for companies applies to just CO2 or all greenhouse gases.
- Simon Fischweicher of the nonprofit Carbon Disclosure Project said it’s also unclear whether offsets — such as investing in forest restoration projects — can make up the bulk of a company’s emissions reductions, or whether they need to make real cuts in their own emissions plus those of others companies within their supply chain.
- Environmental groups and climate scientists warily view offsets, since many don’t actually result in removing carbon emissions from the atmosphere. In their view, the top priority has to be actual emissions cuts.
Here’s how a few notable companies have handled their pledges:
Stanley Black & Decker is out ahead of the pack in setting a science-based emissions reduction target that is consistent with reaching net zero by mid-century, according to Fischweicher.
- It aims to cut its Scope 3 emissions by 35% by 2030. Such emissions come mostly from the materials used to make their products, the energy consumed by the products when they’re used, and the transportation of the products.
- Stanley Black & Decker is also seeking to cut its own emissions (Scope 1 and 2) by 100% by 2030, while engaging suppliers (Scope 3) to reduce their carbon footprint. Ultimately, it is aiming to reach a point where the company will be sequestering more carbon than it will be emitting.
Google says it went carbon neutral in 2007, and the company is working to get its data centers and campuses to run 24/7 on carbon-free electricity by the year 2030.
- It also aims to reach net zero emissions “across all our operations and value chain” by 2030, but will use nature-based and technology-based carbon removal solutions to offset some of its emissions.
- Notably, though, the company has not yet set a science-based target under the Science Based Targets Initiative. However, Google will have new sustainability announcements in April, a company spokesman told Axios.
- The Science Based Targets Initiative consists of companies whose emissions reduction plans are aligned with achieving the Paris Agreement’s temperature goals.
Microsoft has a strategy to become “carbon negative” by 2030. In its most recent sustainability report, published March 10, the company lays out the successes and difficulties it has encountered in meeting its targets.
- For example, its Scope 3 emissions — which mainly come from the use of its products — increased by 23% compared to 2020, even though it cut its emissions from its offices, manufacturing plants and stores.
- Microsoft chief environmental officer Luca Joppa told Axios the company is “making progress” on its emissions from its operations and energy consumption, and “putting in place the fundamental tools and processes that will allow us to more reliably and accurately measure Scope 3 emissions and make the necessary reductions moving forward.”
ExxonMobil Corp. set its own net zero target late last year, aiming for 2050. However, it did not account for the carbon emissions that occur when its products are burned for generating energy.
- Exxon spokesman Casey Norton said the company is working to increase its supply of products that have lower life cycle greenhouse gas emissions, which in turn could reduce emissions from using its products.
- “In cases where our products are used instead of a higher-emissions alternative, the result is a net overall emission reduction for society,” Norton said via email.
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