Most major U.S. companies express their commitment to setting emissions targets and dealing with climate change. In reality, few are doing everything they can, as a report by As You Sow reveals. The report rated 55 companies on three pillars: climate-related disclosures, GHG reduction targets, and emissions reductions.
Titled Road to Zero Emissions: 55 Companies Ranked on Net Zero Progress, the report found that most companies have not established comprehensive, 1.5 degree-aligned GHG reduction goals or shown progress in reducing their emissions in alignment with net-zero goals.
The overall performance of the rated companies is disappointing. Only three companies received an overall A grade: Microsoft and PepsiCo. One company, Ecolab earned an A-. Other results include:
- Alphabet received an overall “B” grade.
- Apple received a B-.
- Abbot Laboratories received C+.
- Two other companies, Southern Company and Air Products & Chemicals received C- grades. The rest of the companies received D or F grades.
Emissions reductions are another discouraging category. Only six companies (Microsoft, PepsiCo, Ecolab, Alphabet, Prologis, and Abbott Laboratories) received A grades for reducing their GHG emissions at a rate consistent with 1.5 degrees. Most companies are not addressing the full range of scope 1, 2, and 3 emissions. Supply chain and product emissions comprise scope 1, 2, and 3 emissions.
A total of 21 assessed companies have reduced scope 1 and 2 emissions in alignment with 1.5 degrees. Scope 1 and 2 emissions represent 50 percent or more of total emissions for only two companies (Freeport-McMoRan and Air Products and Chemicals). This shows that most companies are not taking action to reduce their most material emissions, according to the report.
The report includes an example of how companies fall short in the emissions reductions category. While Chevron has focused on reducing scope 1 and 2 emissions in alignment with 1.5 degrees over the past three years. When scope 3 products are included, these reductions represent about nine percent of the company’s total emissions. As a result, the company earned an F grade in reduction performance.
GHG target setting
No company received an A grade for setting GHG reduction targets. However, seven companies received B grades in the category, which requires a net-zero by 2050 goal for all emissions scopes with limited use of offsets. Achieving 1.5-degree goals means using offsets only for residual emissions where reductions are not feasible because of technology limitations. Offsets should represent only 10 percent or less of total reductions. None of the companies assessed has a clear commitment to these guidelines. A total of 12 companies have commitments to achieve either net-zero emissions or carbon neutrality by 2050 or sooner across all emissions scopes. No company states an intent to accomplish this with limited offsets. Not one company. Let that sink in for a moment.
Almost two-thirds of companies fail to align emissions targets to any GHG reduction goal aligned with 1.5 degrees. Aligning GHG reduction goals with 1.5 degrees requires 4.2 percent or more absolute emissions reduction annually. The good news is that 35 of the 55 assessed companies have some type of GHG reduction goal, but only 16 of them have both scope 1 and 2 goals aligned with 1.5 degrees. Thirty-nine of the companies fail to align any scope of emissions. Only two companies (Apple and Microsoft) have scope 3 targets aligned with 1.5 degrees.
Most companies (90 percent) report full scope and 1 and 2 emissions but most companies fail to disclose scope 3 emissions. Only 20 of the 55 companies reported all relevant scope 3 emissions. Many of the companies report on scope 3 emissions but do not include their primary sources of emissions. Only 11 companies disclosed the number of carbon offsets purchased.
Calling all stakeholders
The report ends with a call to action for stakeholders. Investors are stakeholders who can take action through shareholder engagement, voting, and purchasing or selling decisions. Through those actions, “investors have the ability to affect company action,” the report declared. Investors have the power to drive action on climate change. The planet and its inhabitants depend on it.