Fortune 500 companies fall short of 2022 climate promises

Not a single member of the Fortune Global 500 made a new climate commitment in the last year.

Fortune 500 companies fall short of 2022 climate promises
Flue gas and steam rise out of chimneys and smokestacks of an oil refinery during sunset on a frosty day in the Siberian city of Omsk, Russia, February 8, 2023. REUTERS/Alexey Malgavko/File Photo

The backstory: Climate Impact Partners (CIP) is an organization that works with big companies to try to fight climate change with the help of worldwide industry. The idea is to get for-profit companies to voluntarily take climate action. It works with carbon markets to fund carbon reduction projects to help companies offset their emissions, on top of pushing for greener practices within those companies.

Founded in 1997, CIP has the goal of slashing a billion metric tons of CO2 by 2030. Every year for the past five, CIP has taken stock of how the Fortune Global 500 (the 500 biggest companies in the world by revenue) have performed when it comes to their environmental promises and releases a report on this “climate commitment” progress. The UN says we need annual emissions cutbacks of 8% over the next decade to limit global warming to +1.5 C from pre-industrial levels.

More recently: Many of the world’s biggest companies have made major climate promises. In fact, over 900 of the biggest 2,000 have net-zero goals. But having a voluntary goal and actually taking action to reach that goal are two different things.

Back in June, sustainability data provider, ESG Book, found that only 22% of the 500 biggest public companies by market value actually had practices that worked with the 2015 Paris Agreement. It showed that most of these companies have either done even more to contribute to climate change since 2018 or aren’t revealing their greenhouse gas emissions in the first place. On top of that, the Science-Based Targets initiative, or SBTi, recently found that about 120 major companies, including Amazon, didn’t follow through with their promises to set SBTi-endorsed emissions goals.

The development: According to the CIP's fifth annual study on climate commitments, not a single member of the Fortune Global 500 made a new climate commitment in the last year. Climate promises are stalling for many, and those who made promises in the past haven’t necessarily been meeting them. And 34% of the Fortune Global 500 don’t have any climate commitments at all.

The report also shows that there’s only been a 3% increase in the number of companies with 2050 net-zero commitments and no increase in 2030 targets. But, the companies with targets have earned about US$1 billion more in profits than the companies with no commitments. Even with big promises, though, these companies have only seen their emissions decline by about 7%.

One big issue here is that, well, many companies aimed to use carbon credits to offset their emissions, but those emissions are really hard to reduce, like the burning of jet fuel by planes. So now, companies are stepping away from their short-term goals while still saying they’re committed to long-term climate action.

Key comments:

“Our data presents a clear message: we need to do more, and we need to do it quickly,” ESG Book CEO Daniel Klier said in June. “Without a fundamental change in the way the global economy operates, it’s not obvious how we see a significant shift.”

“Many companies are learning that the beginning of decarbonization is easy,” said Günther Thallinger, a board member at insurer Allianz who chairs a UN climate-focused investor group. “The moment you really need to go into true transformation, the work becomes quite difficult.”

“Urgent ambition and action are vital from the top earning companies to harness the full power of the private sector in meeting our global goals,” said Sheri Hickok, CEO of Climate Impact Partners. “The lack of climate commitments from some of the world’s largest companies is concerning as we get closer to 2030. At this critical juncture, we need companies to lean in, not pull away. The good news is that we have found clear markers for the companies making the most positive impact on emissions today, serving as an example for others to follow.”