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Latest corporate climate progress: Plenty of work remains

Net-zero emissions goals by 2050 ‘absolutely critical,’ energy expert says

(Photo: Jim Allen/FreightWaves)

With the help of several think tanks and members, Climate Action 100+ — the largest investor-led initiative on climate change — released its first net-zero company benchmark this week. 

The good news: 52% of the focus companies seek to become net-zero by 2050, if not sooner. The not-so-good: Less than half of those companies setting that ambitious goal actually cover the full scope of most material emissions. 

“We see some progress, but we also see that in certain areas across the board, companies are lagging” in their climate change strategies and goals, Lila Holzman, senior energy program manager at As You Sow, said in an interview with FreightWaves.

The assessment focused on 159 of the 167 corporations that Climate Action 100+ identified as contributing to 80% of global industrial greenhouse gas (GHG) emissions. With more than 575 investors, including As You Sow, Climate Action 100+ seeks to ensure these large corporations do their part to reduce GHG emissions.

Creating robust, short- and medium-term emission reduction goals and strategies, including scope 3 emissions in targets and disclosures, and aligning future investments with net-zero emissions goals are some of the areas that need work, according to a release.

The companies were assessed on a wide range of climate indicators and were classified as meeting all criteria, partially meeting criteria or not meeting criteria. The indicators assessed include:

  • Net-zero GHG emissions by 2050 (or sooner) ambition.
  • Long-term (2036-2050) GHG reduction targets.
  • Medium-term (2026-2035) GHG reduction targets.
  • Short-term (2021-2025) GHG reduction targets.
  • Decarbonization strategy.
  • Capital allocation alignment.
  • Climate policy engagement.
  • Climate governance.
  • Task Force on Climate-related Financial Disclosures (TCFD) disclosure.

How the shipping and logistics sector is unique

Getting shipping and logistics companies involved in climate change and emission reduction goals is critical because of the large impact they have on the environment, Holzman said. 

“The line of sight for getting to net-zero is not as clear” for the freight industry because more environmentally sustainable strategies are not always as readily available, Holzman said. She added that the “hard to abate” categorization and extra challenges shipping faces only increase the importance of starting the research, transition and adoption of green technologies sooner.

The need for net-zero emissions targets

The results showed that just 39 out of the 159 companies assessed met all of the criteria for a goal for net-zero GHG emissions by 2050 or sooner. Why does this matter? Getting to net-zero emissions by 2050 or sooner is “absolutely critical,” and it’s what scientists agree could prevent the worst effects of climate change, Holzman said. She added that this goal gives the world a better chance of limiting climate change from warming past 1.5 degree Celsius, which aligns with the Paris Agreement.

“There is consensus around the need for net-zero emissions globally by 2050,” Holzman said, but even companies that commit to this goal still have a lot of work to do. It will be very difficult to reach a goal of this magnitude without a detailed plan and immediate action. 

The large majority of corporations assessed did not meet any or only met some of the criteria for short- and medium-term GHG reduction targets, which has Holzman worried. She said that long-term goals are necessary and a step in the right direction, but companies need to back that up with action now.

How scope 3 emissions tie in

Scope 3 emissions are indirect emissions that occur in a company’s value chain, according to the Environmental Protection Agency. Many companies assessed are not including scope 3 emissions in their emission reduction goals, strategies and disclosures. 

“Indirect emissions still matter, and they have to be on someone’s books,” Holzman said. 

Although European companies are more likely to include them, she said it is common for companies to avoid taking responsibility for their scope 3 emissions. It makes sense why there is resistance. It would be much easier to reach a net-zero emissions goal by 2050, or any GHG emission reduction goal, if a company did not include scope 3 emissions. However, this would create a false sense of climate change progress, Holzman said.

Ideally, all companies will adapt to the changing climate by implementing emission reduction strategies. If shipping and logistics companies do not lead the way, Holzman said it is likely they will get tied in eventually because their scope 1 and 2 emissions are part of other companies’ scope 3 emissions.

  • Maersk: The results showed that Maersk has a goal for net-zero emissions by 2050 or sooner, but scope 3 emissions are not included in every emissions target. The company had some positive and negative results for the short-, medium- and long-term emission reduction targets. Future capital allocation alignment and climate policy engagement still need to be addressed, according to the assessment indicators.
  • Airbus Group: While Airbus released three zero-emission hydrogen-powered plane concepts in 2020, the company has some work to do in terms of climate change goals, according to this assessment.
  • United Airlines Holdings Inc.: United fully satisfied the net-zero GHG emissions goal for 2050 or sooner. The company has some mixed results in the emission reduction targets depending on the timeline. The results showed that capital allocation alignment and decarbonization strategies need some work.
  • Oil and gas companies: Royal Dutch Shell, BP and ConocoPhillips were among the 39 companies in this category. ConocoPhillips appears to be a bit behind the other two in terms of these indicators, but most of the criteria are only partially met for all three.

The path forward

Holzman views this assessment as “quite comprehensive and very useful to investors,” but she said it’s a tool that is designed to evolve over time. 

There is an Excel file with the comprehensive assessment results available to the public for download. Holzman hopes that investors, corporations and consumers will use it to learn about companies’ climate goals and about areas where there is room for growth. 

Climate Action 100+ purposefully did not rank or score the companies because it didn’t want to misrepresent the progress or goals of companies. As the data stands, companies can see how they stack up against competition by comparing the results of each indicator.

Holzman recognized that there are still a lot of unknown factors and things to be done. She called for all companies, especially the larger ones, to get on board with the target for net-zero emissions by 2050 or sooner and do what they can today to work toward it.

“This isn’t something where if some companies do it and others don’t, it’s OK. It’s not OK,” Holzman said. 

Click here for more FreightWaves articles by Alyssa Sporrer.

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Alyssa Sporrer

Alyssa is a staff writer at FreightWaves, covering sustainability news in the freight and supply chain industry, from low-carbon fuels to social sustainability, emissions & more. She graduated from Iowa State University with a double major in Marketing and Environmental Studies. She is passionate about all things environmental and enjoys outdoor activities such as skiing, ultimate frisbee, hiking, and soccer.