Companies take step back from making climate target promises

Hundreds of companies including Microsoft, Unilever and JBS have been removed from a validation process for their climate plans after failing to submit sufficiently ambitious targets.

More than 1,000 companies representing $23tn in market capitalisation responded to a call before the UN COP26 climate summit in 2021 in Glasgow to commit to setting net zero emissions goals.

Since then, the Science Based Targets initiative (SBTi), a standard-setting body backed by a coalition of non-profit organisations, has provided a check on those targets, to determine whether they are in line with a global goal to ideally limit warming to 1.5C above pre-industrial levels as set out in the Paris climate accord in 2015.

But many companies have been forced to revise their plans as they reached the 2023 year end, marking the end of a two-year deadline. This has led to their removal from the approval process by SBTi.

Companies argue that governments have not created the policy frameworks needed to achieve the emissions reductions, making it difficult for them to move as fast as they originally thought.

“The conversation in a lot of places is that we have missed 1.5C [warming threshold] already . . . but at the same time you’re being told you have to set a 1.5C target,” said Nicola Davidson, vice-president for sustainable development and corporate communications at steelmaker ArcelorMittal.

“We felt this [1.5C target] was too big a step-up in terms of ambition given what we see globally, when you look at our footprint, for all the [policy] levers required to accelerate the steel industry’s transition,” Davidson said.

While the long-term global average temperature rise of 1.5C is measured over more than a decade, the continued rise in greenhouse gas emissions means the chances of remaining within that level continue to narrow.

The world has already warmed by at least 1.1C, and must cut emissions by 43 per cent by 2030 in order not to breach the 1.5C level, scientists say.

Of the 1,045 companies that joined the Business Ambition for 1.5C campaign between 2019 and 2021, more than 230 have not submitted targets as promised. This has led to them being marked as “removed” on SBTi’s website this week.

The removed label, applied to about 500 companies in the database in total, may also mean that a company has submitted a target that was rejected by SBTi for not being strong enough, said a person familiar with the matter.

The Brazilian meatpacker JBS, among the companies marked as removed, said SBTi had developed a new approach to measuring agricultural sector climate targets since JBS made its initial commitment.

The move would not “alter JBS’s climate reduction objectives and ambition to set targets based on sound science”, it added.

The SBTI decided last year to give companies two years to submit targets once they had committed to doing so, with an extension for some to the end of January this year.

Unilever is among the companies that have not submitted their target to reach net zero emissions for verification by SBTi. It recently released a revised climate action plan that stretches out 15 years to 2039.

Under the updated plan, it aims for a 42 per cent cut between 2021 and 2030 in energy and industrial emissions from its clients and suppliers, known as scope 3 emissions.

“What we’ve decided we want to do is focus on the near term for 2030, make sure that we get there,” Rebecca Marmot, Unilever’s chief sustainability officer, told an FT Climate Capital event in London.

“Because if we don’t get to [a] 40 per cent reduction by 2030, unfortunately the reality of reaching net zero in 2039 will be much more difficult for us.”

In a survey by SBTi of companies that had not ended up submitting a net zero target, 21 per cent cited the challenge of getting a handle on scope 3 emissions

These emissions make up the majority of most companies’ carbon footprint and would need to come down significantly in all high-emitting industries to limit global warming to 1.5C.

The Securities and Exchange Commission said last week it would not ask large US companies to disclose these, citing compliance costs.

Microsoft said it would continue to pursue “ambitious goals, which have not changed since we set them”.

Other companies complained that the SBTi’s net zero standard was “too abstract” or “too far in the future” or said that regulation could conflict with the target-setting. But most said they still intended to put forward a net zero target in future.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here