The Science Based Targets initiative last week changed the status of 239 companies on the dashboard it uses to track corporate net-zero goals to “commitment removed,” underscoring the difficulty corporations have in defining strategies to meet that goal.
Microsoft, Procter & Gamble, Unilever and Walmart are among the most prominent corporations now listed as “commitment removed” for net zero by SBTi. They represent more than $4 trillion in market capitalization. All four companies told GreenBiz they are continuing to pursue aggressive emissions-reduction goals.
The changes stem from an SBTi policy that took effect in 2023 giving companies 24 months to submit science-based targets for validation once a “commitment” is made. The companies that had their status changed last week had until Jan. 31, 2024, to meet that requirement for previously declared net-zero commitments.
A number of companies have had problems living up to SBTi’s standards. In January, Intel told GreenBiz it declined to participate with SBTi because the standards do not allow it to account for past reductions or emissions avoided through the use of artificial intelligence. Nvidia also does not follow SBTi’s standards. Amazon had its “commitment removed” last summer.
The biggest obstacle: Scope 3
Companies seem to be having greatest difficulty reducing their Scope 3 emissions to hit SBTi’s goals. Scope 3 refers to indirect emissions from a company’s customers and supply chain, and are logistically the most difficult to mitigate.
SBTi surveyed 971 companies — representing $21 trillion in market cap — who made net-zero commitments between 2019 and 2021. “Around half of the companies which responded to the survey cited Scope 3 being too much of a challenge as a barrier to setting net-zero targets,” SBTi said in a summary of that survey.
SBTi is currently reviewing its Corporate Net-Zero Standard, and has said changes could be forthcoming by 2025. Among revisions being considered are those related to Scope 3 target setting and measurement.
“Recognizing, learning and addressing obstacles experienced is our focus in this report, as SBTi develops the next version of its Corporate Net Zero Standard,” the company said.
The challenge of measuring Scope 3 was underscored by the U.S. Securities and Exchange Commission’s unrelated decision to let corporations off the hook when it comes to reporting those emissions as part of its new rule on climate disclosures. Under that proposed mandate, public companies must disclose only Scope 1 emissions (those made directly by a company) and Scope 2 emissions (those related to the energy they use).
Walmart, Microsoft, P&G and Unilever respond
Walmart — which has cut more than 1 gigaton of emissions from its supply chain since 2017 — was the first retailer to set science-based targets for its Scope 1 and Scope 2 emissions, seven years ago. When contacted about the SBTi removal, the company said it is finalizing an analysis of its Scope 3 emissions and plans to evolve its strategy after that.
“This approach will be informed by science, align with the latest guidance from the Greenhouse Gas Protocol, and reflect our unique position in the overall value chain as a global multicategory retailer,” Walmart said in a statement.
Microsoft likewise reiterated its ambitions in a statement that pointed to its 2020 commitments for water, carbon removal, waste and ecosystem protection. “SBTi’s removal of the net-zero commitment from our profile in no way impacts Microsoft’s continued pursuit of our ambitious goals, which have not changed since we set them,” the company said. “Microsoft continues to work with SBTi and maintains a near-term SBTI-validated target that is aligned with the Paris Agreement.”
P&G is still actively working with SBTi and is managing near-term Scope 1, 2, and 3 emissions reduction targets have been validated by the organization, the company said in a statement. “Our focus remains on sharing credible progress, aligning with science, and engaging in collaborations to drive positive climate action,” P&G said.
Unilever was unable to validate its first net-zero target, set back in 2021, because SBTi’s current methodology is different than the net-zero definition used by the the Intergovernmental Panel on Climate Change, according to a spokesperson. It has submitted an updated climate transition plan for approval, the spokesperson said.
Unilever’s plan, published last week, includes an absolute reduction target of 42 percent from its ingredients, packaging, logistics, product disposal and other Scope 3 activities. “We expect to receive approval from the SBTi for these targets shortly,” the spokesperson said. “Unilever’s priority remains reducing emissions within the scope of our net-zero ambition, from 2039, with the same volume of carbon removals.”
‘Commitment removed’ can be reversed
SBTi also validates near-term actions that companies hope will cut their emissions in half by 2030. Of the 239 companies that received the net zero “commitment removed” label, 60 percent still have near-term targets in place, the organization said.
SBTi was created in 2015 to give credibility to companies’ voluntary “science-based targets” for emissions reductions in line with the Paris Agreement goal of limiting global temperature increases to 1.5 degrees Celsius. As of November, more than 2,000 companies were chasing SBTi’s blessing for their corporate net-zero plans; about 500 corporations had “validated” net-zero targets at that time.
The “commitment removed” label can be reversed. “Companies are welcome and encouraged to submit targets at any time,” said SBTi in the materials accompanying its update published March 7. “After their targets have been validated, companies which were listed as ‘commitment removed’ on the dashboard will be marked as ‘targets set’.”
Editor’s note: This story was updated March 13 to add P&G’s comment.