Why Are Big Companies Failing To Keep Their Net Zero Promises?

Why Are Big Companies Failing To Keep Their Net Zero Promises?

KAKALI DAS

Have you ever made a promise you thought you could keep but couldn’t? Now imagine if people with hundreds of millions of dollars made promises that affected everyone, but didn’t keep them.

This is happening with some of the world’s biggest companies. They use fancy phrases like “Net Zero by 2040,” “Towards Carbon Neutrality,” “Transform to Net Zero,” or “Zero Emissions.”

About half of these companies say they will become net zero in the future. But last year, many didn’t even have a clear plan to meet their goals. Some even admitted they won’t reach them. And this is despite their goals being not very ambitious to start with.

So why is this happening? And should we believe these promises?

First, let’s understand what “Net Zero” means. When a company says it will go net zero, it means it promises not to release more greenhouse gases than it can remove from the air. Scientists say the world needs to reach net zero by 2050 to avoid dangerous climate change. Many big companies have made this promise.

But cutting emissions is easier for some businesses than others. For example, companies that mostly have offices, like insurance firms, can switch to renewable energy and use video calls easily.

But airlines? Delta Airlines says it will be net zero by 2050. Or fossil fuel companies? Shell says it wants to be a net zero energy company by 2050 or sooner. These claims are more complicated because their businesses depend on burning fossil fuels.

Even though reducing emissions is hard, many companies still make big promises.

For example, BrewDog, a brewery, said it was “the world’s first carbon negative brewery.” But that’s not true.

Let’s look at what to watch out for in company climate goals.

The first question is: Are companies really cutting emissions?

Companies create three types of emissions:

1. Direct emissions – pollution made on site, like burning fossil fuels in their factories or trucks.

2. Indirect energy emissions – pollution from the electricity or heating they buy.

3. Other indirect emissions – emissions from their suppliers, like cotton growers or shipping companies.

Direct and energy emissions are easier for companies to control. For example, a fashion brand can use energy-efficient machines or electric trucks, or switch to renewable energy.

But to check if companies are really cutting emissions, you need data. And companies often show data in ways that make them look better than they are.

John Lang, who started a group that watches company promises, says it’s important to stop “creative accounting” – where companies twist numbers to look good.

Take Gucci, the luxury fashion brand. In 2018, Gucci promised to make fashion without harming the environment. In 2021, they said they were “carbon neutral” and planned to cut emissions by 50% by 2025. At first, that sounds good.

But when you look deeper, Gucci’s reports show emissions per dollar of sales, not total emissions. Because Gucci’s business grew, their total emissions actually went up by 36%, not down.

Also, in 2023, Gucci stopped saying it was carbon neutral. They only shared data from 2021 onward, leaving out earlier years. If you compared to 2015, it would show a different story.

This lack of honesty isn’t just Gucci’s problem.

John Lang says companies that promised net zero three years ago should already have clear plans. But often, those plans are vague or hidden in small print.

Here’s a big problem: Many companies have to burn fossil fuels to run their business. Without that, they can’t operate. So they rely on a tool called carbon offsets to meet their goals.

Offsets mean a company tries to balance out its emissions by funding projects like planting trees or renewable energy.

But many companies use offsets too much instead of cutting emissions. And many offset projects, especially tree planting, don’t work as well as promised.

For example, BrewDog said in 2020 it was carbon negative because it would plant a million trees in Scotland to cancel out its pollution. But many of those trees died, and BrewDog stopped calling itself carbon negative.

Experts like Sybrig Smith say that while forests are important to fight climate change, relying on planting trees alone delays real action to cut emissions.

Apple also claims some of its Apple Watch models are carbon neutral. But critics say this relies on low-quality offsets and assumes all suppliers use renewable energy, which may not be true.

“Carbon neutrality” is different from “net zero.” Carbon neutrality has no clear rules and often depends on offsets. Net zero is more regulated and requires real cuts in emissions.

So offsets and lack of transparency block real progress.

There is another issue: most emissions from companies come from their suppliers – indirect emissions. These are hard to measure and control.

But companies can try to help suppliers reduce emissions. Walmart’s “Gigaton Project” supports suppliers to cut energy use and waste. H&M gives cheap loans so its suppliers can switch to renewable energy.

Helping suppliers reduce emissions is very important.

Still, companies are struggling. Last year, only 1 in 6 of the world’s biggest companies were on track to hit net zero by 2050, which is worse than the year before.

Among industries, insurance companies are doing best. Fashion and airlines are near the bottom.

How can big polluters reach net zero?

First, by cutting emissions in their own operations, even if it means changing their whole business. For example, the Danish company Orsted stopped selling coal energy and now leads in offshore wind energy.

Second, companies need to stop tricking with numbers and “greenwashing” — making false claims about being green.

Governments are starting to act. Since 2023, the European Union requires big companies to share real data on emissions and targets. Third parties check this data.

The EU will ban false green claims. The UK and Australia have similar rules. For example, BrewDog had to remove its “carbon negative” ads in the UK.

More oversight from governments and civil society means companies face real pressure.

John Lang calls this “a new phase of net zero,” where companies must figure out how to reach net zero, not just say they will.

Many companies don’t know what net zero really means yet.

Most companies still put profits before the planet, but it’s harder now to hide behind empty promises. They will have to take real steps to cut emissions.

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