A report published by the New Climate Institute last week analyzed the transparency and integrity of corporate climate commitments. It made many headlines for stating that major companies — including sustainability darlings such as Google, Ikea and Unilever — are failing to meet their climate goals.
The report evaluated the work of 25 large multinationals based on their efforts to track, disclose and reduce emissions, set targets and account for unabated emissions. It looked at how companies publicly disclose respective information and assessed the quality and credibility of their efforts.
The authors concluded that no company deserved a “high integrity” rating. Showcasing “reasonable integrity,” the global shipping company Maersk received the best mark. Three technology companies — Apple, Sony and Vodafone — earned a moderate rating. All five food companies included in the ranking lagged. Walmart fared best with a “low integrity” rating while Carrefour, JBS, Nestlé and Unilever closed out with “very low integrity.”
Is the sector really this much behind? Yes and no.
Scope 3 struggles
There are clear laggards in the food and agriculture sector, such as JBS. According to the report, the Brazilian meat giant announced a net-zero target by 2040 last year that lacks a definition and likely omits supply chain emissions, which make up 97 percent of its overall footprint. Besides, JBS doesn’t explain how it plans to reduce the 3 percent of emissions within its Scopes 1 and 2. Such a commitment can’t be taken seriously and deserves the report’s “very low integrity” label.
But the New Climate Institute isn’t happy with how any of the other companies treat their Scope 3 emissions either. It criticizes Carrefour’s and Walmart’s separation of operational and supply chain emissions into distinct goals and programs instead of bundling them under an overarching climate commitment. Nestlé includes most Scope 3 emissions in its net-zero target but hasn’t provided a clear path to reducing them. Unilever doesn’t pass the Scope 3 assessment either, despite fully including its supply chain in its net-zero target. Like Nestlé, it falls short in outlining a detailed emissions reduction pathway.
This confirms that the sector has more work to do when it comes to supply chains. The report points to the significance of those emissions — 91 and 98 percent for Walmart and Carrefour, respectively. As such, progress on this issue will be imperative for climate mitigation. With the Science Based Targets Initiative’s new food and agriculture guidance, the industry has a Scope 3 framework to adopt, hopefully leading to better alignment.
What the report is missing
But the analysis doesn’t accurately represent efforts food companies have already made to engage their suppliers. It’s a much more cumbersome task compared to the other companies included in the ranking. Maersk — the shipping company at the top of the rating — finds 63 percent of its emissions in just one item: bunker fuel. That’s much easier to disclose and make headway on than the thousands of products and suppliers large food companies manage.
The next best tier in the report is mainly made up of technology companies. They have more complex supply chains than Maersk but still pale compared to the highly decentralized food world. Rather than capturing companies’ climate integrity, the methodology might be mirroring the complexity of each sector’s supply chains and operations.
Rather than capturing companies’ climate integrity, the methodology might be mirroring the complexity of each sector’s supply chains and operations.
When it comes to carbon offsets and related marketing claims, I share the authors’ concerns. For example, Unilever and Nestlé distance themselves from relying on offsets at the corporate level while encouraging individual brands to pursue them, tagging products with carbon-neutral labels.
According to the report, Nestlé’s meal-kit company Mindful Chef claims to be climate neutral since 2020. Other Nestlé brands such as Starbucks, KitKat and Gerber are adding carbon-neutrality claims to their products in the coming years while relying on nature-based offsets rather than supply chain decarbonization. This can be deceptive to consumers who don’t know the difference between offsetting and reducing emissions.
Walmart is pursuing a better path when it comes to carbon-neutral claims. The retailer is committed to protecting or restoring 50 million acres of land by 2030 and won’t tie this work to neutralization claims.
Progress over perfection
Overall, I appreciate the authors’ efforts in holding companies accountable to their commitments. Such scrutiny is essential. But conclusions need to be made carefully and with more context to avoid damning headlines about programs that are doing more good than harm.
Broad-brush criticism of the sustainability industry may be counterproductive, preventing companies from taking valuable but imperfect steps and transparently communicating their challenges to the world. As Winston Churchill already preached, let’s not let perfection be the enemy of progress.
February 17, 2022 at 02:21PM