Climate change is an urgent challenge facing humanity. To address this issue, the cooperation of everyone, especially large corporations, is of paramount importance. However, a recent report has exposed the sad truth that the world's largest companies are "helpless" in the face of the climate crisis, taking completely ineffective actions and even "covering up" their responsibility for the growing climate crisis.
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A recent report by the New Climate Institute has exposed the alarming state of climate action by the world's largest corporations. The 51 largest corporations in the world, including giants like Exxon Mobil, Shell, and BP, with total revenue of $6.1 trillion in 2022, are emitting a staggering 8.8 gigatonnes of greenhouse gasses (GHGs), equivalent to the total annual GHG emissions of India, Russia, and Brazil combined.
The recent Voluntary Carbon Market Initiative (VCMI) has proposed a "Scope 3 Beta Flexibility Statement" that allows companies to offset up to 50% of their Scope 3 emissions. On April 9, the Science Based Targets initiative (SBTi) - the largest verifier of corporate targets - announced that it would accept the use of carbon offsets as a tool for companies to address Scope 3 emissions. However, it is unclear whether the VCMI mechanism is linked to SBTI.
While some companies have made commitments to climate goals, the reality is that their actions are still not enough to limit global warming to 1.5 degrees Celsius - a threshold that scientists say is necessary to avoid the worst consequences of climate change.
The report also criticizes the use of "cover-up" measures by many companies, such as carbon offsets, to avoid accountability for the majority of their emissions and make real changes in their operations to reduce emissions. This has raised serious concerns from investors, consumers and regulators.
Voluntary Reporting System: Effective but Not Enough
Many companies set climate goals on a voluntary basis. These goals are then assessed by leading standard-setting bodies (such as SBTi, MSCI Net Zero Tracker, etc.). This certification helps to strengthen the legitimacy of corporate goals.
However, this system still has clear loopholes, the biggest of which is the lack of direction in determining the baseline emissions for calculating emission reductions. Many companies declare ambitious goals, express their support for a low-carbon world, but then back down or quietly abandon them. SBTI has recently removed hundreds of companies, including Microsoft and Unilever, from its database for failing to update their plans.
According to the Climate and Sustainable Development Research Council (CCRM), we have overemphasized the importance of voluntary climate commitments from companies in this crucial decade. A more stringent accountability system for corporations is needed so that goals can translate into real emission reductions from the private sector.
Companies need to set more ambitious goals, switch to renewable energy and adopt sustainable business models. At the same time, governments also need to enact stronger policies and regulations to push corporations to fulfill their commitments. Only with the cooperation of everyone can we build a sustainable future for our planet.
Source: Down To Earth
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