The world’s biggest multinational companies are failing to meet the bold climate change pledges they have made – and are obfuscating their failures through “ambiguous commitments, offsetting plans that lack credibility and emission scope exclusions”.

This is according to the Corporate Climate Responsibility Monitor 2023, which was released on Monday by Carbon Market Watch and NewClimate Institute.

The report focuses on 24 multinational companies that have endorsed the Paris Agreement to ensure global warming does not exceed 1.5 degrees Celsius. 

Greenhouse gas and carbon emissions need to be cut by 43% and 48% respectively between 2019 and 2030 to limit the global temperature increase to 1.5°C, according to the Intergovernmental Panel on Climate Change (IPCC, 2022). 

But the companies’ targets only amount to a 15% reduction in “full value chain emissions between 2019 and 2030”.

‘Low integrity’ companies

The climate strategies of American Airlines, Samsung Electronics, meat company JBS and retail and grocery multinational Carrefour were described as “very low integrity”.

One rung up were the “low integrity” companies, including Amazon, DHL, Foxconn, Mercedes Benz, Pepsico, Volkswagen and Walmart.

Their poor ratings were the result of “inadequacy or complete lack of explicit emission reduction commitments alongside ambiguous net-zero pledges”, according to the report.

Apple, Arcelor Mittal, Google, H&M and Microsoft were some of the companies described as having “moderate integrity”, while shipping company Maersk was rated “reasonable” – the top rating of the companies. Together the 24 companies account for about 4% of all global greenhouse emissions.

Substantial ‘greenwashing’

Warning of substantial “greenwashing”, the report called on “regulatory oversight at international, national and sectoral levels”.

Speaking at the launch, Carbon Market Watch’s Lindsay Otis said that it had taken a team of accomplished researchers “a number of months” to understand the companies’ pledges and strategies.

“Companies’ climate change commitments do not add up to what their pledges might suggest,” according to the report. 

Their 2030 targets can “rarely be taken at face value”, mainly because they focus on direct emissions or emissions from procured energy but exclude indirect emission categories that account for “over 90% of the greenhouse gas emission footprints for most of the companies we have assessed”.

For others, 2030 targets are misleading due to reliance on offsetting.

“The findings in our report suggest that many companies only plan to reduce a small share of their full emission footprint, relying instead on offsetting their remaining emissions with contentious carbon credits,” according to the report.

“We find that at least three-quarters of the 24 sampled companies rely on forestry and land-use-related offsets. The demand for such carbon dioxide removals would exceed the potential of the world’s natural resource base by around two to four times if these practices would be replicated by other companies,” the report notes.

“Moreover, these plans demonstrate the widespread lack of awareness that the biological storage of carbon is fundamentally unsuitable for offsetting claims due to the non-permanence of the climate impact.”

Regulation

“Companies must play a central role in finding and scaling up solutions for deep decarbonisation, but their efforts need urgent acceleration and appropriate regulatory frameworks,” according to the report.

It cites the European Union’s Corporate Sustainability Reporting Directive, which enters into force this year  2023 and will introduce “tighter requirements for corporate climate strategies”.

However, it calls for close monitored “to ensure a high standard of compliance”.