Fix the Planet newsletter: When net zero means not zero

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Have you ever wondered if companies’ net-zero targets hold water? It seems many may not. An authoritative analysis this week found that the climate goals set by 25 of the world’s biggest firms, including Amazon, IKEA and Volkswagen Group, can’t be taken at face value.

The report by NewClimate Institute, a Germany-based non-profit, compared the firms’ pledges with their actions and found they will, on average, cut their emissions by 40 per cent rather than the 100 per cent you’d expect. (Our explainer here unpacks how the “net” bit works.)

The findings will provide fuel for critics of the very idea of net-zero targets. In the past year, some have argued that the term, and the rush of companies and countries setting goals without action, has enabled a “burn now, pay later” approach based on wishful thinking about removing carbon dioxide from the atmosphere. At the COP26 climate summit last year, the disconnect between nations’ net-zero targets and their short-term goals only heightened that criticism.

So how can corporations draw up better net-zero targets? Or should we be looking to scrap the term entirely? This week’s Fix the Planet takes a look.

What did the report say about today’s corporate targets?

Silke Mooldijk at NewClimate Institute and her colleagues first looked at the world’s biggest companies by revenue, before screening for corporations that had made bold climate change pledges. They then looked for a spread of sectors and countries, landing with a list that runs from Apple and supermarket giant Carrefour to Google, IKEA, Maersk (the world’s biggest shipping company), Sony, consumer goods firm Unilever and more. Together, they account for about 5 per cent of global greenhouse gas emissions.

Maersk, whose green plans I’ve written about here, was the only one of the 25 whose target was rated as having “reasonable integrity”, the second highest of five categories. None made the top class. 11 fell into the bottom ranking, very low integrity, including BMW Group, energy firm E.ON and Nestlé. If delivered properly, the pledges should shave 2.7 billion tonnes of CO2 off global emissions. In reality, they look set to cut around 0.6 billion tonnes of CO2.

Simply trying to scrutinise the targets was a huge effort, says Thomas Day at NewClimate Institute. “We were astonished at the time it took to assess the integrity of companies’ claims,” he says. It’s worth noting that several of the companies disagreed with how their targets were characterised.

What were the most common problems?

The biggest was that many corporations aren’t planning to significantly reduce their own emissions, relying too much on carbon offsetting to cancel out a rump of emissions in their operations and supply chains. At least five of the companies, for example, have only committed to emissions reductions of less than 15 per cent. Another issue, which might seem in the weeds, is the choice of the baseline year to measure the cuts from. Day says this can “significantly undermine” the ambition of targets, especially if an unusually high-emissions year is chosen.

Other issues include ambiguity on what is and isn’t covered by the net-zero goals. Some firms don’t include so-called scope 3 emissions, those from the consumption of a company’s products. In the case of an oil firm, that would mean the relatively small emissions from producing the oil and gas emissions are covered, but the far bigger ones from customers burning oil in their cars aren’t.

Finally, the team looked at how companies planned to do the “net” bit of the targets. Mooldijk says a heavy reliance on carbon offsetting is contentious, with only one firm ruling out using offsets. Two thirds of the companies plan to rely on nature-based offsets, such as tree planting. That is “especially problematic”, says Mooldijk, because the permanence of the carbon storage isn’t guaranteed (trees may be destroyed in fires) and because land availability means such nature-based offsets are limited.

Okay, what might better targets look like?

“The key thing that we are looking for is for companies to show leadership by making a clear and specific commitment to deep emission reductions,” says Day. Without that, net-zero targets are ambiguous and the flexibility afforded by the “net” element of the goals can be misused, he adds. The Science Based Targets initiative, which advises firms on how to best set net-zero targets, recently said its standard was for all companies declaring a net-zero goal to commit to an absolute emissions reduction of 90 to 95 per cent before 2050, depending on their sector. Setting short-term, interim targets is also crucial for credibility, says Mooldijk. Sony is one example that she praises.

Are we asking the impossible of firms?

Day thinks not. “The bar for companies is quite high, but not impossibly high,” he says. One defence of the strictness of the analysis is the urgency spelled out by last year’s Intergovernmental Panel on Climate Change report. Another is that these are some of the world’s biggest corporations, with the resources to match, and who act as role models for much smaller companies, adds Day.

So should we scrap talk of net-zero targets?

Some people say the language needs to be dropped. Gilles Dufrasne at Carbon Market Watch, a non-profit that collaborated on this week’s report, says it’s crucial that companies don’t exaggerate what they’re doing. For that reason, he says: “We believe advertisements built around terminology such as carbon neutrality and net zero should be abandoned.” The problem is corporate net-zero targets are “incredibly murky and unclear”, he says. They also hide big differences between firms with serious and empty targets. “For the consumer, it’s essentially impossible to differentiate,” says Dufrasne.

One option would be for companies to forego net-zero terminology and be more specific about what they’re planning to do, says Day, such as a 95 per cent emissions reduction goal. If net-zero targets routinely referred to that level of decarbonisation, the term would be fine, he says. “What is not fine is ambiguous net-zero pledges, or net-zero pledges that do not commit to deep decarbonisation.”

Thomas Hale at the University of Oxford, who wasn’t involved in the report, says it shows the enormous value in scrutinising net-zero claims. But Hale, who runs Net Zero Tracker, says the failings identified aren’t a reason to ditch such goals. “Scrapping net-zero targets altogether would be a major step backward, because we need a benchmark to measure companies against,” he says.

Finally, it’s worth saying that help is coming to scrutinise these net-zero claims. At the COP26 climate summit, UN secretary general António Guterres promised to establish a task force on the commitments. It won’t be a watchdog that forensically delves into individual companies’ targets, but will likely lay out what it sees as best practice for what a good goal looks like. New Scientist understands the group’s membership, remit and more details will be announced before the end of March.

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