Companies are increasingly setting their own goals for carbon neutrality in the absence of a federal plan to address global warming, bracing their business for the stark financial realities wrought by climate change.
But while the patchwork of climate goals may score points with consumers and increase pressure for major action, a corporate-led climate movement would still leave the U.S. lagging behind its global counterparts.
As Climate Week plugs along in New York, the United Nations announced Monday that the number of commitments from local governments and businesses to reach net-zero emissions has doubled in less than a year.
Morgan Stanley, AT&T and Walmart all set new climate goals in the past week, the latest in a string of companies with some $11.4 trillion in combined annual revenue whose goals range from ambitious plans to cut emissions to those that largely continue business as usual but seek to offset their pollution by buying carbon credits.
Tyler Wry, a professor at the University of Pennsylvania’s Wharton School of Business who has studied the business response to coronavirus and climate change, said he takes the pledges with “a healthy dose of skepticism.”
“On one hand, I think it’s great that the discourse is shifting towards taking climate change seriously,” he said.
“It’s just important that we don’t take all of these statements at face value, that we actually have some sort of follow-up and hold these companies’ feet to the fire around these commitments. Because it’s really easy around these points like Climate Week to signal virtue and support and then not have follow-through because the day to day pressures of corporate decisionmaking don’t always lend themselves to continued attention,” he added.
The push for climate goals comes amid a broader effort from corporate America to stake out social issues to align their brand with and as studies paint a more dire picture of how climate change will affect a company’s bottom line.
“Climate change poses a major risk to the stability of the U.S. financial system and to its ability to sustain the American economy,” the U.S. Commodity Futures Trading Commission, a Wall Street watchdog, wrote in a landmark report earlier this month.
But companies’ responses have been as varied as the businesses themselves.
Morgan Stanley, like many other major U.S. firms, has settled on a 2050 target for net-zero financed emissions, mirroring the hard-stop deadline for reaching net-zero emissions recommended by the Intergovernmental Panel on Climate Change.
AT&T pledged to reach carbon neutrality by 2035, and Walmart said it would do so by 2040, while acknowledging its plans for doing so are not yet fully fleshed out and rely on technology just beginning to reach the market.
Amazon, which has said it will reach net-zero emissions by 2040, is also being open about the uncertainty surrounding its path to reaching that goal.
“We don’t really know exactly how we’re going to get there. It’s going to be hard, but one way or another we’re going to reduce our carbon footprint to net-zero,” one of the company’s sustainability science researchers says in one of Amazon’s commercials.
Lila Holzman, energy program manager with As You Sow, which works with shareholders and businesses on corporate responsibility plans, said her group encourages companies to set big goals that align with the targets scientists have determined are necessary to avoid the most catastrophic impacts of global warming while also charting out more feasible shorter-term steps that get them started on the right path.
“We get the whole gamut of these types of commitments and it’s on the public and investors to ask for the details,” Holzman said.
Research shows the growing number of pledges should have a measurable impact, but a review by the Climate Action Tracker found that the corporate emissions reductions would not be enough to get the globe on track to meet the goals of the Paris climate accord.
Victoria Mills, managing director of the Environmental Defense Fund, which works with companies on their climate policies, said even imperfect plans can force companies to prepare for a future where supply chains will be disrupted and operations will have to change.
That all contributes to an ecosystem where companies are expected to take action and face pressure from investors if they fail to meet their goals — moves she said are still not enough.
“If you look at where we need to go, which is net-zero by 2050, voluntary commitments from companies only get us a fraction of the way there. To achieve our emissions reductions goals, we must have climate policy. We must make wholesale transformations,” Mills said.
Steps to combat climate change, however, have stalled under the Trump administration, which has pledged to leave the Paris climate accord the day after the Nov. 3 presidential election. Meanwhile, broad climate packages rolled out by Democrats have virtually no path moving forward in the GOP-controlled Senate.
“The problem with having this fall on corporations isn’t that collectively they couldn’t move the needle; it’s a collective action problem just like COVID. When you absolve the central government of the responsibility to take care of this stuff, you get piecemeal responses. Some good, some bad; some helpful, some not,” Wry said.
“It’s not the same as if you have a conductor to the symphony. You can have a bunch of independently really good players, but unless you have someone working to get everyone on the same page, you’re going to have a cacophony instead of beautiful music,” he continued.
Environmentalists are hopeful that things could change if Democratic presidential nominee Joe Biden
Joe BidenBiden on Trump’s refusal to commit to peaceful transfer of power: ‘What country are we in?’ Democratic groups using Bloomberg money to launch M in Spanish language ads in Florida Harris faces pivotal moment with Supreme Court battle MORE wins in November and Democrats take control of the Senate.
The former vice president’s plan calls for the U.S. to reach net-zero carbon emissions economy-wide by 2050, but the electric sector would have to reach that goal first, going clean by 2035.
Holzman said while a Biden administration could lead to a more robust climate approach, companies have already been pushed there by their own investors as well as other governments.
“It’s no secret that the current political environment in the U.S. has impeded progress in this area, but at the same time companies are increasingly global, and they’re being compared to international companies that are facing stricter regulations. So the drivers of why it makes sense to act on climate are all aligned in the same direction,” she said.
Wry said that while the public and investors have to help hold companies accountable for their pledges, it’s important businesses get some credit for their climate commitments.
“There’s a reputation piece to this. They release these statements for a reason, right?” he said. “They want the attaboys and attagirls, and honestly, if they do it, they should get the praise for taking the steps.”
