Carbon Market Watch - New Climate Institute report: 25 multinationals' "neutrality" commitments under the microscope #668


It’s official: carbon-neutral companies are (often) rubbish

On 7 February, the think tanks Carbon Market Watch (Belgium) and the New Climate Institute (Germany) published a report that carefully deciphers the carbon neutrality commitments made by 25 of the world’s largest companies[1]. Pointing out the gap between their claims and the extent of the commitments actually made, the authors, who include three members of the Net Zero Initiative’s international expert group[2], highlight the many flaws in companies’ claims of “carbon neutrality” and “net zero”. Their conclusions are in line with those expressed by Carbone 4 on several occasions in various articles and publications.

The first limitation highlighted by their report is the more or less serious way of measuring the impact of an activity on the climate. Only 8 of the 25 companies examined consider all the emissions attributable to their activity. In other words, the other 17 exclude from their scope items as crucial as the manufacture, use and transport of raw materials or products, even though they often represent more than two thirds of a carbon footprint. With scope 3 removed, a car manufacturer can, for example, achieve ‘neutrality’ without having to worry about the emissions coming out of the exhaust pipe of its vehicles. Similarly, without scope 3, an investor’s “neutrality” will be determined primarily by the replacement of its old boilers and light bulbs in its premises, and not by the emissions of the activities it finances, even though this is its business model…

Beyond this vagueness about the scope of measurement, five companies on the panel claim to be aiming for neutrality without even committing to reducing their emissions by more than 15%, a figure to be set against the 40-50% reduction required by 2030 compared to 2010, in order to contain global warming to 1.5°C[3]. Neutral in 2050? That’s easy!

The third grievance illustrated by the report is that a major part of the communication on neutrality is still based on the misnamed “offset”, despite the criticism that has been made of it on numerous occasions[4]. 19 of the 25 companies selected base most of their commitment to neutrality on this controversial approach, without however specifying how, or without providing sufficient guarantees as to the permanence of the projects financed: their quality differs greatly, depending on whether they take into account adaptation to existing ecosystems, future climate change, etc. Like any investment, the financing of sequestration projects is subject to hazards that vary according to their quality, hazards that are all the more crucial in a rapidly changing climate system. Any neutrality strategy must therefore be accompanied by clear information on the operational means (financial, human, technical, etc.) and on the nature of the projects envisaged, as a prerequisite for their credibility.

The simplicity of the words “neutrality” or “net zero” gives them an undeniable rhetorical effectiveness but, in the absence of clear rules, leads to ambiguous and simplistic communication. For, and it is the merit of this publication to show this, the word “neutrality” covers extremely diverse realities and actions, and cannot therefore constitute a guarantee of credibility on its own. This observation underlines the urgent need to use robust instruments to assess and monitor neutrality strategies, particularly in the area of sequestration, which is not yet as mature as the carbon footprint. As Silke Mooldijk and Sybrig Smit, co-authors of the report, summarise: “Regulators should not rely on consumer and shareholder pressure to drive corporate action. Companies must be subjected to scrutiny to confirm whether their promises and claims are credible, and must be held accountable if they are not. The Net Zero Initiative intends to play its part.

To be continued on Carbon 4

Access the full report here