A report released last week by the New Climate Institute analyzed the transparency and integrity of corporate climate commitments. He grabbed headlines for saying big business – including sustainability darlings such as Google, Ikea and Unilever – were failing to meet their climate targets.
The report assessed the work of 25 large multinationals based on their efforts to track, disclose and reduce emissions, set targets and account for unreduced emissions. It examined how the companies publicly disclose their respective information and assessed the quality and credibility of their efforts.
The authors concluded that no company deserved a “high integrity” rating. Demonstrating “reasonable integrity”, global shipping company Maersk received the highest rating. Three tech companies – Apple, Sony and Vodafone – received a moderate rating. The five food companies included in the rankings lagged behind. Walmart fared best with a “low integrity” rating while Carrefour, JBS, Nestlé and Unilever closed with “very low integrity”.
Is the sector really so backward? Yes and no.
Scope 3 fights
There are obvious laggards in the food and agriculture sector, like JBS. According to the report, the Brazilian meat giant announced a net zero goal by 2040 last year that lacks definition and likely omits supply chain emissions, which account for 97% of its overall footprint. In addition, JBS does not explain how it plans to reduce the 3% emissions in its scopes 1 and 2. Such a commitment cannot be taken seriously and deserves the report’s “very low integrity” label.
But the New Climate Institute is also not happy with how other companies are dealing with their scope 3 emissions. It criticizes Carrefour and Walmart’s separation of operational and supply chain emissions into separate goals and programs at the instead of grouping them under a global climate commitment. Nestlé includes most Scope 3 emissions in its net zero goal, but has not provided a clear path to reduce them. Unilever also fails the Scope 3 assessment, despite fully including its supply chain in its net zero goal. Like Nestlé, it fails to define a detailed emissions reduction trajectory.
This confirms that the sector still has work to do when it comes to supply chains. The report highlights the importance of these emissions – 91 and 98% for Walmart and Carrefour, respectively. As such, progress on this issue will be imperative for climate change mitigation. With the new Science Based Targets Initiative guidance on food and agriculture, the industry has a Scope 3 framework to adopt, which will hopefully lead to better alignment.
What is missing from the report
But the analysis does not accurately represent the efforts food companies have already made to engage their suppliers. It is a much heavier task compared to other companies included in the ranking. Maersk – the leading shipping company in the ranking – finds 63% of its emissions in a single element: bunker fuel. It’s much easier to disclose and advance than the thousands of products and suppliers the big food companies run.
The second-best tier of the report is mostly comprised of technology companies. They have more complex supply chains than Maersk but still pale in comparison to the highly decentralized food world. Rather than capturing the climate integrity of companies, the methodology could reflect the complexity of each sector’s supply chains and operations.
Rather than capturing the climate integrity of companies, the methodology could reflect the complexity of each sector’s supply chains and operations.
Regarding carbon offsets and related marketing claims, I share the authors’ concerns. For example, Unilever and Nestlé are moving away from relying on company-level offsets while encouraging individual brands to pursue them, labeling products with carbon-neutral labels.
According to the report, meal kit company Nestlé Mindful Chef has been claiming to be climate neutral since 2020. Other Nestlé brands such as Starbucks, KitKat and Gerber will add carbon neutral claims to their products in the coming years as they continue to grow. relying on nature-based offsets rather than supply chain decarbonization. This can be misleading for consumers who do not know the difference between offsetting and reducing emissions.
Walmart is following a better path when it comes to carbon neutrality claims. The retailer has pledged to protect or restore 50 million acres of land by 2030 and will not link this work to neutralization claims.
Progress rather than perfection
Overall, I appreciate the authors’ efforts to hold companies accountable to their commitments. Such control is essential. But conclusions need to be drawn carefully and with more context to avoid damning headlines about which programs do more good than harm.
General industry criticism of sustainability can be counterproductive, preventing companies from taking helpful but flawed action and transparently communicating their challenges to the world. As Winston Churchill once preached, let’s not let perfection be the enemy of progress.