Corporate Net-Zero Pledges: The Bad and the Ugly

Abstract

The Paris Agreement on Climate Change, adopted in 2015 and ratified or acceded to by 192 states and the European Union (EU), marked a historic turning point on global climate action. Achieving the agreement’s goal of limiting global warming to not more than 1.5 °C relative to the industrial era (1880-1900) will require a transformation of global energy systems, with the active participation and contribution of all actors in the economy. Many companies have pledged to reach net-zero direct and indirect greenhouse gas (GHG) emissions by 2050. This report analyzes such pledges by 35 companies across seven industries—oil and gas, mining, chemicals, utilities, cement, steel, and food processing—that jointly represent 64% of global GHG emissions on a direct emissions (scope 1) basis.

To examine how industry giants incorporate climate considerations into their business plans, this analysis considers companies that are ranked within the top ten of their sectors based on market capitalization. In addition, the analysis focused on companies that have publicly available net-zero pledges or other climate targets that provide insights into their future decarbonization plans.

Based on data from Climate Action 100+ (CA100+), Influence Map (IM), Transition Pathway Initiative (TPI), Science Based Targets Initiative (SBTi), and corporate sustainability reports from the selected companies, this analysis leveraged qualitative and quantitative methods to understand the quality of net-zero pledges and reports from these industry giants. Specifically, this report focuses on the following questions:

1. Does the company have short- and medium-term targets?
2. Are the targets based on absolute emissions or on emissions intensity?
3. Are the targets aligned with science-based climate goals?
4. Does the company’s net-zero target include scope 3 GHG emissions?
5. Does the company consider targets in planning for capital expenditures (CAPEX), use an internal
carbon price, or both?
6. Does the company rely on carbon offsets, carbon capture and sequestration (CCS), or both?
7. Does the company’s governance structure incentivize climate action?
8. Does the company have a policy not to lobby against climate policy?

Keywords: Transparency, Greenhouse Gas, Corporate Sustainability, Paris Agreement, Climate Change, Investment, Environment, CCSI, Agribusiness, Land-Based, Sustainable