Making net-zero pledges count

September 27, 2022 09:55
Photo: Reuters

Walking down a Toronto street recently I saw an ad touting a fossil-fuel company’s net-zero credentials. But to see such belief-straining claims, I would not even need to leave my house.

According to a study by the Guardian and InfluenceMap, such ads are all over Google. Ads for oil giant Shell, for example, appeared on 86% of searches for “net zero,” with many promoting the company’s pledge to reach net-zero emissions by 2050. Are corporations finally waking up to the urgency of the climate crisis, or is this just more greenwashing?

One thing is certain: the climate crisis is escalating fast. California is enduring record-breaking heat waves. A third of Pakistan is under water. China is suffering a withering drought, which may have global ramifications. And that is just what is happening right now. From cold snaps in Texas to wildfires in Europe, climate change has become impossible to ignore.

Climate action has come a long way since the Paris climate agreement was signed in 2015. Notably, net-zero has gone mainstream, with some 90% of global GDP now covered by net-zero targets. And it is not just governments that have adopted them; many of the world’s biggest companies have done so, too, motivated by a combination of business interest, investor expectations, and consumer pressure.

But if corporations – including even fossil-fuel companies – are now “climate leaders,” fully and loudly committed to the net-zero cause, why are emissions still rising? A look at the history of climate action reveals the answer.

Over the last 20 years, a diverse array of climate initiatives has sought to persuade businesses and investors to accept the idea of setting climate-related targets, cutting emissions, and then setting even more ambitious targets. These initiatives have had one thing in common: all have been voluntary.

As anyone who has ever broken a New Year’s resolution knows firsthand, a promise made is not always a promise kept. If someone says they will achieve net-zero, how can we be sure that they are taking the steps needed to deliver? Right now, we can’t.

This has enabled “climate coasting,” with companies marketing themselves as environmentally conscious while continuing with business as usual, or close to it. In fact, as it stands, only one in three corporate net-zero plans cover the company’s full carbon footprint, including that of its supply chain. And not one of the world’s biggest corporate polluters has fully explained how it plans to achieve net-zero emissions.

As United Nations Secretary-General António Guterres recently put it, “The world is in a race against time, and we cannot afford slow movers, fake movers, or any form of greenwashing.” These are the problems the High-Level Expert Group on Net-Zero Emissions Commitments, which I chair, is meant to solve. We are an independent, diverse group of experts determined to provide science-based recommendations for achieving the goal so many governments and companies have embraced.

Our work is just beginning, but three things are already clear. First, a pledge without a plan is meaningless. Companies need to align their business strategies with their commitments, take ambitious action, and start delivering progress immediately. And this does not mean fudging the numbers with questionable offsets; the only credible way to achieve net-zero is to slash emissions.

To support this effort, the High-Level Expert Group will define what it will take to achieve net-zero emissions. This includes establishing clear criteria for credible net-zero plans that account for issues of equity and climate justice. Regional and sectoral standard-setters can then adopt our criteria, thereby ensuring consistency and comparability.

Second, voluntary schemes are not enough. We don’t need New Year’s resolutions; we need new business plans. Regulation will be essential here, both to ensure that voluntary climate roadmaps are replaced by mandatory strategies and to level the playing field. A central objective of the High-Level Expert Group is to map the needed regulations.

Finally, accountability is essential. When companies, banks, investors, cities, and regions make net-zero commitments, we must be able to trust them. Fair rules of engagement will help. But governments, corporations, and financiers must also embrace radical transparency. Progress will be easy to spot: investment in clean energy will supersede investment in fossil fuels, and emissions will fall.

Already, our expert group has engaged more than 800 groups, met with thousands of people, and received almost 300 submissions detailing how net-zero commitments can be improved – a clear indication of how keen stakeholders are to get this right. Success would not only give us a shot at stabilizing the climate; it would bring vast economic opportunities. According to McKinsey, growing demand for net-zero offerings could generate more than $12 trillion in sales annually by 2030.

Last year, I left politics to dedicate my time to the two things that mattered most to me: my kids and climate change. The two priorities are deeply interconnected. If we are to avoid a future where our children are buying “net-zero” bacon between floods and fires, we must close the gap between the promises we hear and the action we need.

Copyright: Project Syndicate
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Chair of the United Nations Secretary-General’s High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities