After President Joe Biden took office, corporate America rushed to put out statements boasting of a newly robust commitment to climate change, from going "net zero" to becoming "carbon neutral" — but with no government oversight of these terms, experts say many of these pledges could risk falling short of legitimate change.
In the weeks immediately following the inauguration, Wall Street titans including Wells Fargo, Bank of America, JPMorgan and Morgan Stanley announced "net zero" greenhouse gas emissions goals by 2030 and 2050. Energy giant Royal Dutch Shell doubled down on its previous goal; and BlackRock, the world’s biggest asset manager, said its portfolio companies would need to show how they plan to reach net zero by 2050.
While these commitments represent a welcome shift toward corporate action in the face of the growing climate crisis, goals such as “net zero” and “carbon neutral” mean very little when they don’t reduce emissions released by companies in the first place, according to Joeri Rogelj, director of climate change research at the Grantham Institute at Imperial College London.
“The challenge here is really that there is no one definition for these terms, particularly ‘carbon neutral’ or ‘climate neutral,'” he told NBC News. “There is no clear scientific definition of what that means. In some contexts, it can mean different things, and that’s why it's important for a company to not just throw out that label but tell people what they're going to do.”
For instance, Royal Dutch Shell’s new goal to become net zero by 2050 also includes plans to increase its fossil fuel output in the near term by boosting gas production. To reach its net zero goal, the company plans to offset 120 million metric tons of carbon dioxide through “nature-based” projects.
BlackRock CEO Larry Fink told clients last year that it would divest from companies that generate more than 25 percent of their revenues from thermal coal production by the middle of 2020. But it still has about $85 billion indirectly invested in coal companies and funds a dozen fossil fuel expansion projects as it transitions its investments to support a low-carbon economy.
"Our conviction is that climate risk is investment risk," Matt Kobussen, a spokesperson for BlackRock, told NBC News in part in an emailed statement. "Among the many initiatives to help our clients navigate this risk, we have both achieved 100 percent ESG integration in our active strategies and, where we have discretion in these strategies, we have fully exited positions in our equity and bond holdings in companies generating more than 25 percent of revenues from thermal coal production."
"Shell aims to reduce the carbon intensity of the energy products we sell over the next decades to reach 100 percent reduction in carbon intensity by 2050 compared to its 2016 baseline," Anna Arata, a spokesperson for Shell, told NBC News in an emailed statement. The company did not respond to an NBC News request for comment on its increase in gas production.
The Environmental Protection Agency requires greenhouse gas emissions reporting across 8,000 gas suppliers and CO2 injection sites in the United States. But it does not have a program that requires companies to report greenhouse emissions stemming from electricity consumption, Enesta Jones, a spokesperson for the agency, told NBC News in an emailed statement. Earlier this month, U.S. climate envoy John Kerry said Biden plans to issue an executive order requiring financial institutions and companies to disclose climate change risks.
Some multinational companies still have a long way to go to deliver on their climate change promises, according to Climate Action 100+, an investor-led initiative that advocates for climate-related resolutions and holds companies accountable for failing to address climate risk. The group recently analyzed 159 company climate goals and found only six companies explicitly tied future capital expenditures to their long-term emissions reduction targets. Only 10 percent of companies use climate-scenario planning to help limit global warming to under 1.5 degrees Celsius, compared to pre-industrial levels.
The lack of universal requirement for reporting emissions leaves room for variation when it comes to how companies track, calculate and report on their goals, said Robert Schuwerk, executive director of the North American office of Carbon Tracker, a nonprofit financial think tank focused on climate risk and the energy industry.
“A lot of people think, 'Let's add up emissions like you add up dollars in your bank account,'” Schuwerk said. However, “If I'm a company and I'm accounting for oil that auto users combust, that's their emissions that are my emissions. I think it's more valuable to cast a wide net and make it more responsible across the supply chain.”
Industry giants such as Microsoft and Ikea are frequently cited as examples of rigorous goal setting in the corporate world, according to Rogelj. Microsoft announced last year it will be carbon negative by reducing its direct and indirect emissions through investments in clean energy technologies. Similarly, Ikea uses the term “climate positive” to describe its goal to reduce more emissions than it produced by 2030. The furniture giant reported last year that it reduced emissions by 4.3 percent in fiscal year 2019 to 24.9 million tons of carbon.
“From a financial perspective, how do you get buy-in?” said Jennifer Keesson, sustainability manager for Ikea U.S. “It’s really a part of our ethos and we know that this is necessary to be able to contribute and sustain ourselves.”
Not all industry watchers are critical about recent corporate climate announcements. Phil Duffy, executive director of Woodwell Climate Research and a former climate science adviser under President Barack Obama, said it is “fantastic” that companies are now doubling down on efforts to combat climate change.
“Big picture: I feel encouraged by the clear awakening by the private sector about the risk of climate change, and there is a real sense of motion across the private sector about being a part of the solution,” he said.
“You can be cynical about it and say there is greenwashing — but I can tell you a lot is genuine.”