In recent months, major companies have back-pedalled on their climate commitments.
Shell’s 2035 target is dead and buried. BP has abandoned a target to cut oil and gas output by 2030, and Norwegian state-owned oil company Equinor is toying with dropping its renewable energy ambitions entirely.
Other companies, including Volvo and Air New Zealand, have weakened their near-term net zero and clean energy ambitions.
Unilever’s decision to drop its plastic pollution and biodiversity goals has been widely publicised while Morgan Stanley, one of the world’s largest creditors of the fossil fuel sector, pulled back on previous plans to trim financing for fossil fuel projects.
Are we seeing a massive outbreak of socially contagious fatalism amid a net zero recession? Is it truly impossible to eliminate fossil fuels from modern business operations? No, and no.
What we’re actually seeing is that when you shake this system hard, a bunch of companies are going to fall out of the bottom.
And the system is being shaken to its core.
There has been an explosive rise in climate lawsuits against major oil companies, many centred on misleading green claims. Various other types of ‘climate-washing’ cases are being brought against the world’s largest companies.
A substantial proportion of climate-related lawsuits are penalising companies for ‘climate washing.’ Meanwhile, net zero-related regulations are rapidly proliferating worldwide.
It is to be expected perhaps that people are focusing on what has been ditched, rather than on what remains, but the outlook is positive.
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Climate commitments and goals remain important for identifying which organisations are enabling and accelerating the transition, and which are recklessly attempting to slow it down in the false hope of temporary, short-term gains.
The latest Net Zero Stocktake report reveals a 23 per cent increase in corporate target setting over the last 18 months, with a notable increase in Asia.
A report by the MSCI Sustainability Institute shows a steady increase in corporate emission disclosures, including for full value chain emissions, or so called Scope 3 emissions.
The latest benchmark from the Climate Action 100+, an investor-led initiative to ensure the world’s largest corporate emitters take necessary action on climate change, reveals improvements in target-setting, emissions intensity reductions and disclosures, despite a few companies scaling back short-term ambitions.
A NewClimate Institute analysis of more than 70 corporate climate strategies since 2022 shows no indication of ‘greenhushing.’
Overall, the evidence suggests that, instead of backtracking on net zero, major companies are retracting unsubstantiated carbon neutrality claims - a decidedly positive development.
Corporate recalibration
Contrary to the narrative of mass retreat, we are witnessing the pattern we’d expect from large-scale recalibration.
The innovation-driven ‘big tent’ phase of net zero was a valuable and necessary surge that propelled climate into the boardrooms and corridors of hundreds of thousands of businesses.
However, all of this is irrelevant if emissions don’t plummet soon. The renewed focus on reducing emissions; implementing supply chain and product-use interventions; maximising the clout of companies across their full spheres of influence; and pursuing beyond value chain mitigation to allow companies to take responsibility for their unabated greenhouse gas emissions are welcome developments.
Quiet but meaningful progress is being made. Several companies are shunning offsets in favour of more direct emissions reductions.
A global structural decline of fossil fuels is both inevitable and within sight. Even if no new climate policies were implemented ever again, there is no stopping a downward shift in humans burning coal, oil and gas.
All companies will be caught in this whirlwind, irrespective of the presence or absence of targets. The difference will simply be between those who take advantage of the shift and those who are buffeted by it.
Climate commitments and goals remain important for identifying which organisations are enabling and accelerating the transition, and which are recklessly attempting to slow it down in the false hope of temporary, short-term gains.
As companies recalibrate their net zero ambitions, we need to help them with strong regulations, recognition for positive corporate actions and increased scrutiny of the worst greenwashers and delayers.
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