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Climate risk pressures continue to grow on countries, cities, companies, and citizens. Greenhouse gas and carbon-pricing initiatives are gaining traction in the voluntary and the regulated markets as a result, both nationally and globally.
In the run-up to the United Nations’ (UN) climate summit in Glasgow, UK, last year, many of the world’s most powerful businesses joined governments in pledging to reduce their carbon emissions to zero in the coming decades.
The private sector has ambitious climate pledges, setting decarbonization targets, including net-zero commitments and clean energy goals. According to CDP Worldwide, nearly 50% of the world’s 500 largest corporations are integrating some form of carbon accounting and climate-related commitment.
(Source: AXIOS and BloombergNEF)
In the U.S., the Securities and Exchange Commission has recently proposed an extremely encompassing climate risk disclosure requirement which, after public input, debate, and a fair amount of lobbying, will likely become a formal regulation for public companies registered in the U.S before the end of 2022, with reporting required to commence by 2024-2026.1 Demand to do so comes from customers, board members, and investors. Until then, most climate risk reporting tends to follow the framework prescribed by Climate Action 100+, an investor network that pushes companies to subscribe to its Climate Action 100+ Net Zero Company Benchmark.
According to a Climate Action 100+ focus list of over 100 global companies which represent roughly 80% of current global emissions, 9.8 billion metric tons of carbon dioxide equivalents are pledged to be mitigated by 2050 across various corporate industries. This amount is just short of China’s current annual emissions and equivalent to over a quarter of global greenhouse gas house emissions today.
The Climate Pledge |
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It’s not uncommon for companies to pair their voluntary reporting with public-facing emissions reduction campaigns. One such campaign known as The Climate Pledge, an initiative co-founded by Amazon and climate advocacy firm Global Optimism, has reached over 300 signatories through March 2022. In total, so far, 313 businesses have committed to The Climate Pledge, a voluntary pledge to attain net-zero carbon emissions by 2040, ten years earlier than firmly advised in the landmark Paris Agreement. The Paris Agreement goal is to keep a global temperature rise below 1.5ºC which, according to climate scientists, in order for the world to have a chance of meeting, global carbon emissions must reach net-zero by 2050. These same climate scientists behind the Paris Agreement also tell us that to meet the goal for net zero by 2050, we will have to halved global emissions between 2020 and 2030. The Climate Pledge is a commitment to these goals.
The Climate Pledge is a carbon emission regime of regular reporting, elimination, and credible offsetting. Some of the top adherents include Amazon (who co-created the initiative in 2019 and applied their naming rights to Climate Pledge Arena, the new Seattle Kraken’s NHL stadium), Accenture, Best Buy, Heineken, HP, IBM, JetBlue, Logitech, Mercedes Benz, Microsoft, PepsiCo, Philips, Proctor & Gamble, SAP, Uber, Unilever, Verizon, and Visa.
The UN’s Race to Zero |
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The Climate Pledge is one of 25 partners in the UN’s Race to Zero. Globally, this is the largest alliance to join 120 countries in the largest ever commitment to halving emissions by 2030 and achieving net zero carbon emissions by 2050. This UN campaign mobilizes this 25-member coalition of leading net zero initiatives, which as of March 18, 2022, included 52 regions, 1103 cities, 7,126 companies, 1,103 educational institutions, 541 financial institutions, over 3,000 hospitals from 60 healthcare institutions, and 24 “other” institutions.2 While several companies do belong to more than one of the 25 UN partner initiatives, none are double counted in these numbers.
Public displays of commitment to mitigating the effects of climate change imply that companies are taking the subject seriously. For example, BlackRock, which manages more than $10 trillion in assets, has urged its businesses to prepare for a carbon-free future, placing sustainability at the heart of its investment decisions.3 Facebook has achieved its goals of becoming carbon neutral and of using 100% renewable energy, according to the company's 2020 Sustainability Report. While Apple is already carbon neutral across its global operations, by 2030, every Apple device sold is promised to have a net-zero climate impact. Google is carbon neutral today but aiming higher - their goal is to run on carbon-free energy, 24/7, at all their data centers by 2030.
But the imperative characteristic in all these various pledges is accountability. One of the more valuable ways of seeing exactly how many entities are actually doing in regard to their climate pledges is by following them on Net Zero Tracker. This website analyzes all countries and regions, as well as the cities within these areas with over 500,000 inhabitants, along with an overview of the 2,000 largest publicly traded companies in the world ranked by revenues, analyzing the key components of those with a net-zero, or similar, publicly stated climate target.
Despite being filled with caveats and warnings, such that climate emissions pledges are often empty and devoid of actual actions, and sighting many instances of greenwashing, the UN's Intergovernmental Panel on Climate Change's (IPCC) landmark April 4 report provided some encouraging news. The conclusion from years of painstaking research compiled by hundreds of the world's top climate scientists and experts is that the world already has the technologies, expertise, and financial capabilities across every sector of the economy to halve global greenhouse gas emissions by the end of the decade, the first major goal of the Paris Agreement.
1 AEGIS: The SEC Proposes Historic Climate-Related Reporting Rules
2 The United Nations: Race to Zero overview
3 The Bureau of Investigative Journalism
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