As the Paris climate agreement celebrates its fifth anniversary, the pact’s member nations are taking stock of their progress toward limiting global warming through dramatic cuts to carbon emissions. The view isn’t pretty.
“It’s very clear that none of us are doing enough,” said Halla Tómasdóttir, CEO of The B Team, a nonprofit that works with business leaders on sustainability goals. But while nation-states are flailing, the corporate sector has seen some bright spots. “We’ve seen some real ambition from the private sector,” says Tómasdóttir, “and it has stayed the course better than governments at some points.” Since 2015, nearly 1,100 companies have signed on to have their climate commitments vetted by the Science Based Targets Initiative (SBTI).
The message is catching on in a number of key sectors: Food production, consumer products, tech hardware, and apparel—all sectors with considerable carbon footprints—are among the top sectors with vetted targets in the SBTI. But the sectors with the largest carbon footprints still aren’t pulling their weight.
Electric utilities, which account for one-quarter of US emissions, are investing heavily in renewables and setting net zero targets, but also pushing for a massive build-out of long-lasting natural gas plants. Airlines like Delta and United have recently announced net zero targets, but they rely on carbon offsets or high-tech carbon capture systems, rather than substantive reductions in fossil fuel use.
“The greenhouse gas-intensive companies are really the ones who really need to be joining, but it’s not happening at the pace we’d like to see,” said Cynthia Cummis, who oversees the SBTI program for the World Resources Institute, in partnership with the Carbon Disclosure Project, World Wildlife Fund, and UN. “The more it costs to reduce emissions, the less likely they are to join.”
Oil and gas, unsurprisingly, remains the most recalcitrant sector.
“The oil and gas sector needs to move from commitments to action, and they’re very far away from that,” Amina Mohammed, the UN Deputy Secretary-General, said in an interview on Dec. 11. “We see some engagement but it’s not enough.”
Most of the global oil majors have adopted some form of net zero target, but they’re largely applied to the small share of their footprint that comes from company operations—things like building energy efficiency and vehicle fleets. None are SBTI members, and relatively few are taking serious steps to transition to a post-fossil-fuel future by setting low-carbon targets for their research or capital spending, or dealing with emissions from customers. So-called scope 3 emissions, which reflect the carbon emitted by energy-consuming customers, are by far the greatest source of the oil and gas industry emissions.
For these companies, the global clean energy transition poses an ultimatum: transition quickly away from oil production and into renewables and other forms of energy-related services, or try to squeeze a couple more decades of profit from the world’s final days of fossil fuels. Just in the last week, Exxon put a flagship carbon capture program on hold in favor of the industry’s most ambitious plans to boost oil production. Meanwhile, several top sustainability executives at Shell quit over concerns that the company was moving too slowly on climate.
Adding to the list of vetted companies—and getting them to stick to their climate goals—will be critical to meeting the Paris goals. Under existing policies, global temperatures are more likely to hit 3°C over pre-industrial averages, a degree over the agreement’s target. That’s a world no one wants to live in.
Right now, it’s too early to know if the SBTI-vetted companies are really on track with their commitments, said Cummis. Most set 2020 as the earliest interim target, and so won’t have data to report until sometime in 2021. Early signs are mixed: In a 2019 survey of companies with Scope 3 targets, WRI found that 44% reported being on track to meet them, and another 46% reported making some, but not enough, progress.
The B Team’s Tómasdóttir cited a few conditions for more companies to set science-based targets and stick to them. One is fixing the financial system. A report on Dec. 10 led by the German climate advocacy group Urgewald found that global banks have poured more than $1.6 trillion into fossil fuel projects since the Paris agreement. Instead, Tómasdóttir said, banks and investors should lower the cost of capital for Paris-aligned companies, and continue to pull back from carbon-intensive investments.
That’s beginning to happen: In October, a group of 30 major institutional investors managing $5 trillion in assets set a goal to cut their portfolio emissions by a third by 2025, and this week New York state’s $226 billion pension fund agreed to drop fossil fuels. Governments also need to continue to set decarbonization policies and fund R&D, so businesses have certainty about the direction of the market and better technology to tackle difficult emissions in heavy-duty transportation, electricity, and other operations.
And, Tómasdóttir said, corporate boards need to take a close look at who is in charge—a recent Bloomberg report found that emissions rise more slowly at companies with an above-average share of women on the board—and tie progress on climate goals directly to executive pay, something that only 2% of S&P 500 companies do.
“The biggest barrier to action is the crisis in leadership,” she said. “You can’t change how you do things unless you change who’s in charge.”
This story has been updated to add comment from the UN Deputy Secretary-General.