For climate campaigners, 26 May seemed like the start of a long-awaited reckoning for oil and gas companies.
Over a single 24-hour period, a Dutch court ordered Shell to dramatically cut emissions, shareholders voted to force Chevron to reduce emissions from the products it sells, and a tiny activist investment firm secured three positions on ExxonMobil’s 12-member board for candidates committed to climate action.
When trying to ascribe responsibility for the climate crisis, it’s hard to overstate the outsized role fossil fuel companies have played. The products of just 100 private and state-owned fossil fuel companies were linked to 71% of global industrial greenhouse gas emissions since 1988, according to a groundbreaking 2017 report.
A subsequent Guardian investigation in 2019 found 20 fossil fuel companies, including Chevron and ExxonMobil, were responsible for more than one-third of all greenhouse gas emissions since 1965 – the point at which experts say fossil fuel companies were aware of the link between their products and climate change.
But it’s not just fossil fuel companies fueling the climate crisis. Even if we immediately phased out oil and gas, emissions from agriculture alone may make it impossible to limit warming to the 1.5C goal in the Paris agreement.
Across a slew of sectors from food and fast fashion to construction and heavy industry, companies have helped drive climate chaos. As climate impacts accelerate – the world is boiling, burning, flooding and melting – there is unprecedented pressure on all companies to start taking their own role in the crisis far more seriously.
This pressure is translating into action. A record number of companies are making climate pledges, but experts warn the pace of action remains glacially slow in the face of a barreling climate crisis.
Even if all current Paris agreement climate pledges are met, the world is still set to see temperature rises of about 2.4C by the end of the century – well above the 1.5C of warming that scientists say will already lead to severe climate impacts.
As countries are under pressure to up their climate ambitions in the run-up to Cop26, the vital UN climate talks in November, the private sector is also being increasingly pushed by investors, employees, activists and consumers to take meaningful action.
In response, corporations have put out a flurry of climate commitments. At least a fifth of the world’s 2,000 largest public companies have now made some kind of “net zero” pledge to cancel out their carbon emissions. They are investing billions in clean energy, moving to electric vehicles, pledging to halt deforestation, and urging the US government to step up climate action.
Tech companies have perhaps some of the most far-reaching goals. Last year, Microsoft pledged to be “carbon negative” by 2030, meaning it would remove more carbon from the atmosphere than it emits. By 2050, it aims to have compensated for all of its historical emissions through carbon removal projects.
Apple says its products and supply chain will be carbon neutral by 2030 and Google has committed to be powered exclusively by renewable energy by 2030 and claims it has already wiped out its carbon footprint by offsetting emissions.
Most oil companies are moving far more slowly. Shell, BP, Total and Equinor have announced plans to reach “net zero” emissions by 2050, but few have commited to halt fossil-fuel exploration. Some have gone much further and completely transformed their business model: Danish firm Ørsted sold its oil and gas business in 2017 and has now installed more than a quarter of the world’s offshore wind capacity.
The transport industry, responsible for around one-fifth of global CO2 emissions, is gearing up for bolder climate pledges. GM Motors announced in January it would be carbon neutral by 2040 and sell only zero emissions vehicles by 2035. The aviation sector, which has been slow to make climate pledges, is considering whether to set a goal of becoming net zero by 2050.
Large numbers of companies, including consumer-facing firms such as Ikea, PepsiCo and Levi’s, are also signing up to the Science-Based Targets initiative (SBTi), which helps companies calculate emissions targets aligned with the Paris agreement ambition of 1.5C. More companies have signed up in the first half of 2021 than in the whole of 2020, according to a Bloomberg report.
“A decade ago, companies were setting these very incremental targets,” said Cynthia Cummis, co-founder of the SBTi and director of private sector climate mitigation at the World Resource Institute. “Now science-based target setting is becoming standard practice.”
And it’s having an impact. An SBTi analysis of 338 large companies with science-based pledges found they had reduced combined emissions by 25% between 2015 and 2019.
Corporations are losing the ability to “fudge the numbers” on climate policies, said Ketan Joshi, an Oslo-based climate analyst who tracks company climate pledges. “Companies are increasingly starting to understand that they’re losing their grip on the public relations hit of announcing a climate ambition and then doing nothing about it.”
There are still big caveats.
Global emissions are rebounding post-pandemic and 2023 is on track to see the highest levels of CO2 emissions in human history, according to the International Energy Agency.
Despite the record number of corporate climate pledges, an analysis of 9,300 listed companies from index provider MSCI published in July found that they are still on course to exceed their “carbon budgets” – the total amount of emissions they can release and still keep in line with 1.5C of warming – within the next six years.
This finding highlights the need for these companies to “dramatically accelerate climate action”, said Remy Briand, head of environmental, social and governance at MSCI. “It is easy to say that becoming net-zero is a high priority, but it is another to take action, especially immediate action.”
While some companies have placed climate change at the top of their agenda, he added, others have made weak pledges or failed to act at all. “For those not matching their commitments or lagging, there should be nowhere left to hide.”
Analyzing what companies are actually doing, however, can be painstakingly difficult when there is no requirement to disclose all key climate information and little consistency in corporate pledges making it all but impossible to benchmark progress.
The changes required are so vast that many companies struggle to even articulate them. In an evaluation of some of the world’s largest greenhouse gas emitters, the investor engagement group Climate Action 100+ found no company has fully disclosed how it plans to reach net zero.
With many corporate net zero pledges still several decades out, often with few interim targets, monitoring their effectiveness can be hard. “We cannot wait for 2050 to see whether we fulfil the commitments or not,” said Gonzalo Muñoz, UN high champion on climate for Cop25. “It’s what we do today, and in these next five to 10 years, that will determine whether we succeed or not.”
Figuring out how to quickly cut emissions is not an easy task for companies, which must work out not only how to reduce direct emissions and those from the energy that they use (scope 1 and scope 2 emissions), but also those which come from the use of their products (scope 3 emissions).
Some of the boldest pledges rely on carbon removal technologies that don’t even exist yet, or at least not at the scale required. Many more are heavily reliant on carbon offsets, which allow companies to invest in “nature based” programs like tree planting or forest protection to counteract their own emissions. Offset projects, however, have been plagued by allegations of flawed accounting, greenwash and sometimes even of actively fueling climate change.
These climate pledges are also voluntary. To some, this shows that industry is trying to take responsibility for its own emissions. For others, it looks more like an effort at self regulation to avoid government intervention.
“I don’t think we have time for voluntary corporate initiatives any more,” said Jennifer Morgan, executive director of Greenpeace International. “We’ve done them for decades and they haven’t worked. I think there’s a real need for governments to be coming in and putting in place some legislative and regulatory frameworks.”
Many companies have publicly called for governments to take stronger climate action; behind the scenes it can be a different story.
Amazon and Microsoft, for example, have been criticized for pitching themselves as climate leaders while also donating tens of thousands of dollars to politicians who oppose climate action. An Amazon spokesperson said it actively advocates for clean energy policies and a spokesperson for Microsoft said that to make progress the company “must engage with candidates and officeholders who hold a range of views.”
The lobbying efforts of fossil fuel majors, meanwhile, are well documented. The five largest publicly-traded oil and gas companies spent over $1bn on misleading climate-related branding and lobbying in the three years following the Paris agreement in 2015, according to a 2019 report by InfluenceMap.
A host of investigations has revealed big fossil fuel companies knew about the link between their products and climate change for decades but continued to argue that climate science was uncertain and to push against climate action. Just last month an Exxon lobbyist was caught on tape by investigative outlet Unearthed describing how the company was actively working against key US climate policies through lobbying and membership of trade associations.
These same firms also encouraged a public narrative of individual responsibility for the climate crisis. British Petroleum notoriously helped to popularize the term “carbon footprint” with an online calculator that encouraged people to measure their own emissions.
This focus on personal responsibility is echoed in other sectors, which advertise “more sustainable” products while continuing business-as-usual models of consumption and production.
“The discussion that moves us away from corporate responsibility to personal responsibility is a huge distraction,” said Shannon Lloyd, an assistant professor of management at Concordia University in Canada. “As an individual, your choices have very little impact in terms of reducing the carbon or other environmental footprint of products. It’s more about getting laws put in place or policies in place than individual purchasing decisions.”
Reaching a net zero world will entail “wholesale transformation” in both infrastructure and how things are done, said Steven Clarke, director for corporate clean energy leadership at non-profit Ceres. “Some people refer to it as on the scale of a second industrial revolution.”
Certain key sectors will face big challenges. There’s a lack of easy answers for some energy-intensive industries with huge carbon footprints, such as steel, cement, aviation and shipping, which are notoriously hard to decarbonize. Sectors which rely on high consumption of products with big climate footprints, such as fast fashion and meat, will also need to adapt significantly for the world to limit temperature rise to 1.5C.
But there is huge potential for innovation and action. Most solar and wind projects are now expected to be cheaper than coal. Investment is flowing into “green hydrogen”, which could provide zero-emissions fuel for ships and airplanes and replace fossil fuels in steel manufacturing.
Meanwhile, pressure on companies is intensifying. More than 1,500 lawsuits have been brought against fossil fuel companies. This number could accelerate thanks to advances in climate science making it easier to link climate damage to corporate activity. Employees are another lever for change.
In 2020, hundreds of Amazon workers criticized the company for climate inaction last year. This year the non-profit ClimateVoice launched a campaign mobilizing employees to demand that big tech companies spend more of their lobbying dollars on climate policy.
Companies cannot tackle the climate crisis by themselves, said Jamie Beck Alexander of Project Drawdown, a non profit focused on climate solutions, “regulation will absolutely be required to transform entire sectors.” But this doesn’t let them off the hook, she added. “If business leaders truly grasped the seriousness of this crisis, they would immediately pivot their entire business models and resources toward scaling climate solutions full stop.”