Over the last few years, corporate executives and investors have enthusiastically jumped into the fight to address climate change with hundreds of the world’s largest companies committing themselves to eliminating their carbon footprints by the middle of the century—a goal known as net zero. That enthusiasm is now on display at COP27, this year’s U.N. climate summit, where executives from some of the world’s largest and most influential companies have gathered in the resort town of Sharm El-Sheikh, Egypt to tout their progress and engage with delegates from around the world.
What these corporate commitments mean depends on who you ask. To some, it represents the most significant advance toward putting the world on track to slow global warming; to others, it’s a whole bunch of greenwashing that amounts to little more than a press release. Into this debate comes a highly-anticipated new report released Tuesday at COP27 that outlines best practices for companies that say they are committed to net zero. The report, released by a commission convened by U.N. Secretary-General António Guterres, offers a sharp rebuke to companies that claim to be tackling climate change without doing the actual work. It also offers 10 pointed recommendations about a path forward for corporations and other “non-state actors” like cities and investors. “If you’re saying to the world, ‘I am net zero,’ then there is a price of admission,” says commission chair Catherine McKenna, a former Canadian Minister of Environment and Climate Change. “You need to walk the talk, you need to deliver on it.”
Delivering on net zero requires a range of different practices, the report says. Companies need to put clear plans in place—short, medium, and long term—that show they actually have a pathway toward it They should focus on reducing their own emissions as much as possible and limit buying carbon credits to offset their emissions. They need to address their entire value chain, meaning they need to look at their own supply chain as well as how their products are used. All three of those practices address common shortcomings of existing corporate net zero commitments.
The report also offers particularly pointed recommendations for the energy industry’s climate commitments: companies need to stop investing in new fossil fuel supply if they want to claim they are committed to net zero emissions. Many oil and gas companies have said they are working toward eliminating their carbon footprint while focusing on so-called carbon intensity targets, meaning they want to reduce how much carbon is generated by digging up the fossil fuels. “The planet doesn’t care about intensity,” says McKenna. “It’s an important measure, but it cares about actual reductions.”
One area that’s likely to make waves is the report’s call for companies to use their lobbying influence to push for climate-related rules and regulations. Many of the world’s biggest corporations—think of Walmart, Apple, and other giants—have made significant strides to address climate change themselves, but have faced criticism for not matching that record in the halls of Congress. The Inflation Reduction Act, the Biden Administration’s landmark climate bill, received limited corporate support, for example.
The willingness of the working group—known formally as the High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities—to call out the long list of questionable practices that have taken hold around net zero won quick praise from activists. Tzeporah Berman, an activist pushing for a treaty to stop new fossil fuels, praised the report for its “courage.” Indeed, the report will provide activists with a clear and credible benchmark to hold corporations to account.
Activists aren’t the only ones who have awaited the report with anticipation. Corporate leaders engaged on climate have followed the commission closely as it worked throughout the year. Its anticipated findings have been a topic of much speculation and discussion.
Time will tell whether non-state actors embrace the rules of the road laid out in the report. And it’s no small question: getting clarity on corporate commitments will shape policies, politics, and economies—not to mention our future climate.
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