Too many companies may be relying on offsetting their emissions through carbon credits rather than cutting their own

Emily Gosden writes on The Times website about a recent study that shows most businesses need to go further to improve the credibility of their targets and their plans for meeting them to avoid accusations of “greenwashing”. Out of the 2,000 largest publicly traded companies by sales, 417 have set net zero goals, the report by the Energy and Climate Intelligence Unit and Oxford Net Zero has found.

Companies drag heels on road to reaching net zero

More than a fifth of the world’s biggest public companies have made commitments to cut their emissions to “net zero”, according to a study.

However, most businesses need to go further to improve the credibility of their targets and their plans for meeting them to avoid accusations of “greenwashing”, the report’s authors warn.

Meeting the Paris climate goal of limiting global warming to 1.5C above pre-industrial levels is forecast to require greenhouse gas emissions to be cut to “net zero” globally by 2050. This means that emissions must be reduced by as much as possible and that any greenhouse gases produced are balanced out by actively removing the same volume of greenhouse gases from the atmosphere, such as by planting trees that absorb carbon dioxide.

Out of the 2,000 largest publicly traded companies by sales, 417 have set net zero goals, the report by the Energy and Climate Intelligence Unit and Oxford Net Zero has found.

However, the quality and credibility of the targets varies widely. Only 27 per cent of the companies that have set targets include emissions across all “scopes” — including “scope 3” emissions in the value chain, such as those from customers using their products.

The United Nations’ Race to Zero campaign, which encourages companies to set net zero goals, has set minimum “robustness” criteria that it asks participating companies to meet before this year’s climate summit in Glasgow, such as setting a target for emissions cuts this decade and publishing progress reports. The analysis has found that while each standard has been met by a majority of companies, only 110, accounting for $2.2 trillion of sales, so far have met all of the UN’s criteria.

The report also highlights concerns that too many companies may be relying on offsetting their emissions through carbon credits — paying for emissions cuts elsewhere, rather than cutting their own.

Thomas Hale, the report’s co-author from the University of Oxford’s Blavatnik School of Government, said: “While the rapid uptake of net zero targets is encouraging, we need much more clarity from actors on how they plan to get there. Although some offsetting may be needed for so-called residual emissions in certain sectors, the most important priority is immediate emissions reductions. If every company and country relies on offsets and not enough on actual emission cuts, we won’t be able to accommodate these globally.”

Speaking at The Economist Sustainability Week yesterday, Chris Stark, chief executive of the Climate Change Committee, said that many companies were making commitments to net zero, but these were not going to be real “if they’re only being met through offsets”.

• An influential climate change investment group has warned that the world’s leading industrial emitters “still have a long way to go”. Eight of 159 companies deemed able to significantly curb greenhouse gas emissions have set sufficiently robust targets to do so, according to Climate Action 100+. whose members collectively manage assets of $54 trillion. Berkshire Hathaway, Warren Buffett’s financial conglomerate, and SAIC Motor, the Chinese state-controlled carmaker, were among the worst performers in the group’s first net zero benchmark.

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