A reality check or strategic survival: how companies are reconsidering net zero pledges
Net zero pledges cover over nine-tenths (91%) of the global economy and yet a target is as good as the plans underpinning it. Corporate net-zero pledges have proliferated in recent years, but just a small fraction meet United Nations guidelines for what constitutes a quality pledge. The details on how countries and companies plan to achieve their pledges are still under development, lacking or vague, very few of them are more transparent and clearly state their meaningful steps towards change.
Moreover, the fast evolution towards tougher standards is making the early birds go trough a reality check. Questions are starting to arise, are roadmaps towards neutrality solid or do the initial plans need to be reconsidered and adjusted. In 2024, almost a decade after the Paris agreement, are companies and institutions really ready to execute on concrete plans?
In a recent article in the Financial Times, the authors described how companies are starting to back away from green targets and it made me wonder whether this is just the tip of the iceberg.
Let’s have a look at a couple of examples from companies in different sectors who have acknowledged they cannot meet their greenhouse gas emissions targets.
EY reconsideration of its climate plan is a classic example of having to adapt to evolutionary standards. EY was early and bolt, and perhaps underestimated how the scrutiny around the carbon offsets projects, which they relied on, would evolve. New standards can quickly put a plan into the risk test and force companies into retreat and rethink modus. The Science Based Targets Initiative has issued a new guideline where the compensation for the reminding unavoidable emissions can not be done by emission avoidance projects, those emissions must be neutralised by active removal of carbon dioxide from the atmosphere.
Unilever had to review their dependencies and update their Climate Transition Action Plan, now they are putting more emphasis at their supply chains to push for deep cuts in emissions outside of their direct control, while keep growing their business.
Another company that is accommodating its climate plans to keep growing its gas business is Shell, who is being more selective about the types of low-carbon energy products it sells. Recently, Shell announced that it will pause construction work at its biofuels facility in the Netherlands due to weak market conditions.
We are witnessing a new wave in the change process where maturity comes in place, where a common effort must be better coordinated and the scale and complexity of what it takes to make pledges happen is looked up trough more experienced lens while enduring the increasing pressure from public and investors that call for evidence of action, rather than ambition.
