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Companies Without Clear Net-Zero Plans Stick Out Like A Sore Thumb

Companies Without Clear Net-Zero Plans Stick Out Like A Sore Thumb

While many large organizations have made bold commitments to achieve net-zero emissions by the middle of the century, their commitments vary, and the likelihood that all (or even most) of them will accomplish their stated objectives remains slim.

Still, when firms like Exxon Mobil Corp., one of America’s major corporate emitters, and JPMorgan Chase & Co., the world’s greatest worldwide financier of fossil-fuel corporations, declare their intentions to drastically decarbonize, one wonders why other companies aren’t doing the same.

Last week, the United Nations Intergovernmental Panel on Climate Change issued a strong warning that global emissions must peak quickly if the world is to avoid exceeding 1.5 degrees Celsius—the Paris Agreement’s stretch goal—and therefore avoid the most catastrophic effects. In a statement, UN Secretary-General Antonio Guterres said, “This isn’t fiction or hyperbole.” “It’s what science predicts would happen as a result of our existing energy policies,” says the author.

Companies who haven’t published solid net-zero plans (or even if they have any) “stand out like a sore thumb,” according to Kyle Harrison, the head of sustainability research at Dailion, where he focuses on topics such as net-zero targets, carbon offsets, and clean-energy procurement. Among the most noteworthy holdouts are Phillips 66, Valero Energy Corp., Kinder Morgan Inc., and Marathon Petroleum Corp.

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Phillips 66 claims to have “meaningful, measurable, and achievable companywide greenhouse gas emission reduction targets,” with 2050 goals added lately. Valero claims to have “one of the most thorough” transition strategies among its rivals, with “strong support” from its stockholders.

Marathon did not respond to a request for comment, and Kinder Morgan declined to comment.

By the end of March, 123 of the Climate Action 100+’s 167 “focus companies” had committed to a net-zero target, committing to cut and/or offset their annual emissions. This is an increase from the 111 firms in September.

With firms increasingly making hazy claims to reduce emissions, it’s conceivable that getting them on the record with concrete plans is a first step toward assuring compliance.

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According to Harrison, the 167 “focus businesses,” which are the world’s heaviest emitters and are under investor pressure to decarbonize, will need to reduce their emissions by 10.2 billion metric tons by 2050, which is equal to 20% of global emissions today. Despite the rise in business net-zero pledges, there are still many laggards in the United States, China, India, and Indonesia when it comes to making promises. Despite significant external pressure, he noted, U.S. oil and gas corporations have been sluggish to embrace suitable goals.

While industry titans such as Exxon have stated net-zero goals, investor organizations argue that the businesses have not gone far enough. Exxon announced in January that it will design roadmaps to eliminate so-called Scope 1 and Scope 2 emissions at its crude refineries, chemical plants, and other sites. However, the plan does not account for carbon emitted when customers use Exxon products like gasoline and jet fuel—Scope 3 emissions, which account for the majority of oil-industry pollution.

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As a result, Exxon will confront seven proposals at its annual meeting next month, including calls to cut oil and natural gas sales. The company’s board of directors wants all of the resolutions to be rejected.

According to Harrison, the quality of net-zero announcements varies “significantly.” He explained that targets can differ in length, emissions handled, locations included, and other factors.

As a result, investors and other stakeholders are unable to compare the effectiveness of various net-zero schemes. Dailion has created a tool to evaluate the pledges of 650 of the world’s largest firms in the most polluting industries.

The program calculates the emissions reductions required for firms to reach their targets, and then rates the pledges’ ambition and legitimacy using 13 different measures, such as emissions addressed (Scope 2 vs. Scope 3) and whether a company has established interim emissions targets. The grades represent the quality of a company’s current net-zero plan, rather than how it will reach the goal if it sticks to its word.

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