How to call BS on corporate climate pledges

Is Walmart’s new climate plan just greenwashing?
Is Walmart’s new climate plan just greenwashing?
Image: Reuters/Rick Wilking
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Last week was a big one for corporate climate pledges, timed to coincide with the United Nations General Assembly. Walmart, Best Buy, and a few other retailers committed to zero out emissions from their operations by 2040. AT&T said it would reach the same goal by 2035, and Morgan Stanley said the emissions from clients and projects it loans money to would reach net zero by 2050.

It’s hard to keep all these pledges straight, let alone make sense of whether they’re game-changing or greenwashing. You can’t weigh all corporate pledges on a single scale, explains John Sottong, an economist at the World Resources Institute (WRI) who helps manage its Science Based Targets Initiative, which dictates guidelines for corporate climate pledges and has certified those of nearly 1,000 companies. A plan’s true level of ambition, or lack thereof, depends on the company’s size, sector, location, and previous climate initiatives, if any.

Still, there are a few key questions you can ask about a given pledge to get a sense of its strength, bearing in mind that an individual commitment may perform well on some questions and poorly on others. “You just have to peel a few layers back on the onion,” Sottong said.

Timeline: What’s the company’s deadline to reduce its emissions?

Ideally, companies should provide at least two deadlines: a near-term goal and a long-term one.

Long-term, the goal for almost every company should be to reach net zero emissions by 2050, if not sooner. Net zero by 2050, for the entire global economy, is the goal scientists believe is necessary to avert the worst levels of warming, so it should be the lodestar for corporate action.

Some sectors that are tough to decarbonize may deserve a bit more leeway; for the airline or steel industries, for example, 2050 may be unrealistic. Conversely, some sectors should be able to move faster. Some electric power utilities, like Southern Company in the southeast US, have faced criticism for allowing themselves too much time to reach net zero.

Meanwhile, a company should have a near-term goal—one to reach by 2030 or earlier—to act as a stepping stone to net zero. Microsoft, for example, plans to get 100% of its power from renewable sources by 2025. Near-term targets are more likely to occur under a company’s current leadership and produce tangible changes in its operations.

“I don’t want to say that 2050 statements are meaningless, because it shows [a company is] onboard with science, but anything longer than five to 15 years is an aspiration, and what really matters is action now,” Sottong said. “Five years means it’s go-time.”

Coverage: What portion of a company’s operations are under scrutiny?

Analysts divide a company’s emissions into three “scopes.” Scope 1 covers a company’s own direct emissions—for example, from combusting fossil fuels in a factory or gasoline in company vehicles. Scope 2 covers emissions from energy purchased by the company, like the electricity it uses in its offices or storefronts. Scope 3 covers emissions from a company’s suppliers and those from customers when they use the company’s product.

Scopes 1 and 2 are the easiest for a company to control. But for many companies—especially major carbon polluters like oil and gas companies—the vast majority of the total carbon footprint is in scope 3. So be wary of company pledges that only mention the company’s own operations, and look for those like Apple that directly target the supply chain.

Another hair-splitting but vital distinction is between absolute, net, and intensity targets. An absolute target, like Google’s, means the company plans to actually eliminate all or some of its emissions, period. A step down is a net target, which means the company may still produce emissions but will offset them in some way.

The sketchiest option is an intensity target, which describes emissions per unit of a company’s product. Efficiency is great, but an intensity target, like Shell’s, still allows for net positive emissions. If consumption of the product increases, a company could meet its intensity target while actually increasing its emissions.

Applying those first two concepts, here’s an emoji-rich markup of Walmart’s recent climate pledge:

Markup with comments of Walmart's climate pledge.

Offsets: Are they for real?

Now let’s get into the nitty gritty. Carbon offsets allow a company to invest in some form of carbon reduction activity—replanting forests is the most common approach; capturing methane from cow farts and burps is also popular—and then subtract the equivalent emissions from the company’s footprint. Offsets are a booming market, and they have been snatched up by companies like Amazon, Shell, JetBlue, and many others to help meet their emissions reduction targets.

There’s nothing wrong with a company buying offsets per se, Sottong said. Various companies sell and certify the products. But an offset can never perfectly guarantee emissions reductions. Reforestation projects are often murky, fraught with land-grabbing accusations, and, as the recent spate of wildfires on the West coast demonstrated, prone to burn down.

And at the end of the day, there aren’t enough possible offsets to bring the global economy to net zero without companies taking steps to eliminate their absolute emissions. So WRI doesn’t allow offsets to count toward a carbon reduction pledge—as they do for Amazon, for example.

“Offsets can be a useful mechanism for going above and beyond your decarbonization goals,” said Sottong. “But they’re not a substitute for that action.”

Messaging: Is a company walking the walk?

Cutting emissions is great, but companies also need to clean up their public messaging and political engagement. Facebook, for example, has a goal to reach net zero emissions by 2030, but has faced stiff criticism for its failure to curb climate misinformation on the site. Corporate lobbying groups are a minefield of bad climate policy; the US Chamber of Commerce, for example, has promoted the agendas of climate change deniers in Congress.

A company that takes climate seriously needs to reevaluate its participation in those groups. BP, for example, dropped out of several oil trade groups as part of its climate pledge this year because it objected to their climate politics, but remains involved with several others with equally dubious track records.

Finally, companies need to be transparent about their progress, and report details about their emissions in annual sustainability reports or another forum.

“The transparency piece is really important,” Sottong said. “If the company just wants to set a  target, but can’t show anyone, it’s not a good sign.”