Sustainable Future

World's biggest companies accused of exaggerating their climate actions

Key Points
  • The analysis, published on Monday by non-profit organizations NewClimate Institute and Carbon Market Watch, found the headline climate pledges of most major multinational firms cannot be taken at face value.
  • The study assessed the transparency of each firm's headline climate pledges and gave them an "integrity" rating.
  • Amazon, Google and Volkswagen were among the household names found to have low integrity on their net-zero targets, while Unilever, Nestle and BMW Group were found to have very low integrity.
Greenwashing refers to the marketing practice in which businesses seek to capitalize on the growing movement for environmentally sound products by selling goods labeled as green that actually aren't.
Andrew Aitchison | In Pictures | Getty Images

The climate pledges of the world's largest companies plan to reduce absolute carbon emissions by just 40% on average, not 100% as suggested by their net-zero claims, according to a study of 25 corporations.

The analysis, published Monday by non-profit organizations NewClimate Institute and Carbon Market Watch, found the headline climate pledges of most major multinational firms cannot be taken at face value.

The study assessed the transparency of each of the firm's climate pledges and gave them an "integrity" rating. It scored them based on criteria including their climate targets, how much offsetting they planned to use and the reliability of those offsets, progress on reducing emissions and transparency.

Amazon, Google and Volkswagen were among the household names found to have low integrity on their net-zero targets, while Unilever, Nestle and BMW Group were found to have very low integrity.

None of the major multinationals were found to have high integrity overall. Maesrk came out on top with reasonable integrity, the report said, followed by Apple, Sony and Vodafone with moderate integrity.

CNBC contacted the companies mentioned in the report for comment. Some disagreed with the methods used in the study and said they were committed to taking action to curb the climate crisis.

Benjamin Ware, global head of climate delivery and sustainable sourcing at Nestle, said the firm's greenhouse gas emissions had already peaked and continue to decline. "We welcome scrutiny of our actions and commitments on climate change. However, the New Climate Institute's Corporate Climate Responsibility Monitor (CCRM) report lacks understanding of our approach and contains significant inaccuracies."

Separately, a spokesperson for Amazon told CNBC: "We set these ambitious targets because we know that climate change is a serious problem, and action is needed now more than ever. As part of our goal to reach net-zero carbon by 2040, Amazon is on a path to powering our operations with 100% renewable energy by 2025."

And a spokesperson for Volkswagen commented: "We agree with the aims of the New Climate Institute that large companies should be held accountable for their claims in a clear and transparent manner. We only disagree with some of their conclusions with respect to our company."

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It comes at a time when corporations are under immense pressure to reduce their environmental impact amid the deepening climate emergency.

The 25 firms evaluated account for roughly 5% of global greenhouse gas emissions, the report says. This reaffirms the scale of their carbon footprint and underlines the potential they have in spearheading the effort to tackle the climate crisis.

Thomas Day, climate policy analyst at NewClimate Institute and lead author of the study, said: "We set out to uncover as many replicable good practices as possible, but we were frankly surprised and disappointed at the overall integrity of the companies' claims."

He added: "As pressure on companies to act on climate change rises, their ambitious-sounding headline claims all too often lack real substance, which can mislead both consumers and the regulators that are core to guiding their strategic direction. Even companies that are doing relatively well exaggerate their actions."

'Put an end to this greenwashing trend'

Near-term climate targets were found to be of particular concern.

The report found the world's biggest companies were on track to cut their emissions by only 23% on average by 2030. That falls far short of the figure of nearly halving emissions in the next decade that the world's leading climate scientists say is necessary to avoid the most damaging effects of the climate emergency.

For the minority of the evaluated 25 companies, the report said headline climate pledges served as a useful long-term vision and were backed up by specific short-term goals.

However, many of the pledges were found to be undermined by contentious plans to reduce emissions elsewhere, hidden critical information or accounting tricks.

Almost all the evaluated companies were likely to rely on carbon offsets of varying quality, the report said.

Carbon offsetting is the controversial practice whereby polluting companies pay for projects elsewhere to reduce or remove carbon, typically by maintaining forests or growing new trees.

Campaign groups are sharply critical of carbon offsets, claiming they allow a business-as-usual approach to continue to release greenhouse gases. Proponents argue they are a useful tool to curb the climate crisis.

The headline climate pledges of just three of the 25 firms — Maersk, Vodafone and Deutsche Telekom — were found to clearly commit to deep decarbonization of more than 90% of their full value chain emissions.

Morten Bo Christiansen, head of decarbonization at Maersk, said on the report's findings: "We are happy to see that our efforts to address climate change are being recognized and are also aware that we still have work to do in regard to transparency of our plans."

The study concluded that, overall, the strategies in place would — if implemented — reduce emissions by 40% on average. It is a far cry from the 100% indicated by many of the companies' net zero and carbon neutral claims, the report said.

What's more, the way businesses talk publicly about their climate pledges was said to be a problem.

"Misleading advertisements by companies have real impacts on consumers and policymakers. We're fooled into believing that these companies are taking sufficient action, when the reality is far from it," Gilles Dufrasne, policy officer at Carbon Market Watch, said in a statement.

"Without more regulation, this will continue. We need governments and regulatory bodies to step up and put an end to this greenwashing trend."

The full list of companies assessed was: Maersk, Apple, Sony, Vodafone, Amazon, Deutsche Telekom, Enel, GlaxoSmithKline, Google, Hitachi, Ikea, Vale, Volkswagen, Walmart, Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.On SE, JBS, Nestle, Novartis, Saint-Gobain and Unilever.

A spokesperson for Unilever said: "While we share different perspectives on some elements of this report, we welcome external analysis of our progress and have begun a productive dialogue with the NewClimate Institute to see how we can meaningfully evolve our approach."

A spokesperson from Sony declined to comment on the report's findings.