How to unpick a company net zero target in 7 steps

• Carefully examine the language of scope coverage, including footnotes. This often reveals major loopholes in emission coverage - and consequently the net-zero targets. Sometimes when a company says that their disclosure includes “all xyz”, consider what is excluded from xyz rather than interpreting this at face value as a confirmation of comprehensiveness.
• Check if disclosure is consistent between documents. Some companies achieve A-ratings for transparency from the Carbon Disclosure Project (CDP) by disclosing all emissions in detail to CDP, while then disclosing a different and much more limited set of emissions in public reports. Information disclosed to CDP is not accessible without registration, technical knowledge and in some cases a paywall.
• Check if scope 3 emissions are really complete. Some companies include one category of scope 3 emissions in their reporting (e.g., business travel) to make it look like they have included scope 3 emissions, although in reality this category only accounts for maybe 1% of their scope 3 emissions, while the use of products and the supply chain are much more important. If companies do not set out emissions explicitly for all 15 scope 3 emission categories, be suspicious.

Examples from the NewClimate Institute’s Corporate Climate Responsibility Monitor 2022 & Milieudefensie study:

• Around 97% of Brazilian meat processing company JBS’s emissions are caused by the production of meat on farms. JBS’s emission disclosure and targets cover meat production on “all JBS feedlots and farms.” What they do not point out is that there are very few JBS feedlots and farms, because almost all of their meat comes from a network of partner farms. Accordingly, their disclosure and target only cover less than 3% of their emission footprint.
• French retailer Carrefour reports that its emissions disclosure and target cover “all integrated stores in all nine integrated countries.” While this sounds like confirmation of comprehensiveness, it actually accounts for less than 12% of Carrefour stores in France and less than 20% of Carrefour stores worldwide. All activities in non-integrated stores, and in the other 21 countries that Carrefour operates in, are excluded.
• Swiss pharmaceutical maker Novartis appears to report on scope 1, 2 and 3 emissions in its public report (Environmental Sustainability Strategy), and claims a CDP A-rating for transparency. But for scope 3, it includes only business travel which accounts for only 0.3% of the scope 3 emissions in their CDP disclosure, which is not easily accessible. Overall, this means that their public reporting of emissions includes only 20% of the emissions they report elsewhere.

Where do I find more in-depth guidance?

• Section 1 of the methodology for the Corporate Climate Responsibility Monitor 2022

Watch out for misleading base year practices.

• British pharmaceutical maker GlaxoSmithKline's commitment to reduce scope 3 emissions by 16% by 2030 from a 2017 base year translates to no significant further emission reduction compared to 2019 levels, when the target was set.
• US pharma company CVS Health has a net-zero target that includes a commitment to reduce 2019 emissions by at least 90%, but their emissions inventory for 2019 shows emissions that are around double that of the years before or after.

If a company uses carbon removals, carefully check whether they classify as permanent

• Most companies are pursuing removals with biological storage. Some report measures to “improve the risk of non-permanence,” but these are often not credible. They are based on closely monitoring for the re-release of carbon into the atmosphere and promise to take action to compensate for any forestry stock changes caused by forest fire, for example. This can only work in practice if there was a guarantee that the company and the crediting standard keep their promise for at least 100 years, which is nigh impossible. 
• “Insetting”: some companies (IKEA, Nestlé) are trying to establish the term “insetting”, a concept they sell as “removals within the value chain”. This is a highly misleading and even less-regulated version of offsetting which itself is a fundamentally flawed approach.

Where do I find more in-depth guidance?

Sections 2.2 and 4.1 of the methodology for the Corporate Climate Responsibility Monitor 2022

• Companies often claim that a single verification by the Science Based Target initiative (SBTi) or another standard is fully sufficient to claim Paris Agreement compatibility for its entire business operations. Sometimes these verifications even cover just single emission sources. The claim of 1.5°C Paris Agreement compatibility for net zero target and their interim target should require a broader justification.
• Different standards and evaluations can be compared to get a more comprehensive overview of how a given target compares to global and sector-specific milestones, for example as defined by the Transition Pathway Initiative, the Climate Action Tracker, the State of Climate Action Report, SBTi, the UNFCCC Race to Zero Breakthroughs, and/or the IEA Road to Net Zero 2050 milestones.  
• Companies often falsely imply that the verification of a specific target by one single organisation as 1.5°C/or 2°C compatible implies its entire operations and specific reduction measures can be seen as 1.5°C/or 2°C compatible.  

Examples:

• There are several carmakers whose emission reduction targets only have a low integrity (see Volkswagen and BMW in CCRM2022) or medium integrity (Stellantis in Milieudefensie analysis), according to the NewClimate Institute.
• Nestlé says that “Information on our approach to climate change can be found in our Nestlé Net Zero Climate Roadmap released in late 2020. This document has been validated by the Science Based Targets initiative (SBTi) and the work that went into it is rigorous and extensive.” The company thus implies that its entire roadmap has been validated by SBTi. But firstly, SBTi does not validate any measures or plans to achieve targets as included in the roadmap. Secondly, as of 15.11.2022, Nestlé has only committed to SBTi but its 2050 net zero target has not been verified by SBTi, while only its 2030 targets (not measures) have been verified.

Where do I find more in-depth guidance?

Section 2.2 and Section 2.3 of the methodology for the Corporate Climate Responsibility Monitor 2022

• Some companies with emission-intensive business operations are simply shifting emissions off their accounts. Targets covering specific emission scopes can be highly misleading if the company tweaks its business model to let emissions happen elsewhere. For example:
  • For electricity generation companies, scope 1 emissions typically account for a lion’s share. Some of those companies set deep decarbonisation targets for scope 1, while transitioning fully or partially from a generation to a retail company. By selling their generation facilities to other (sometimes spin-off) companies, and purchasing the electricity from them, the company appears to make huge emission reductions while in reality the emissions are just shifted from scope 1 to scope 3.
  • Logistics companies might also focus on their scope 1 and scope 2 emissions from delivery vehicles. This allows them to achieve dramatic reductions, by fully or partially subcontracting delivery to other companies, which is already common practice in the sector.

Examples:

• German utility E.ON is an example of a company that transitioned nearly fully from a generation to a retail company, and now partly omits scope 3 emissions from energy sales
• Reductions in Italian utility Enel’s scope 1 emissions are also accompanied by an increase of external electricity purchases, and therefore a shift towards scope 3 emissions. There is no clear phase out plan for gas.