Brand Watch: Instead of marking their own homework on climate ... - Reuters

Brand Watch: Instead of marking their own homework on climate action, could COP28 bring companies to book? | Reuters

Brand Watch: Instead of marking their own homework on climate action, could COP28 bring companies to book?

The Net-Zero Transition Charter is the most explicit attempt yet by the United Nations to welcome brands into the fold of climate action at a COP meeting. REUTERS/Rula Rouhana Acquire Licensing Rights

- Summary

- 929 of world's largest companies have public net-zero targets, but 'limited' evidence of implementation strategies
- Net Zero Transition Charter includes requirement for brands to show emissions pledges are third-party verified
- But full accountability from brands will remain elusive without strong steer from governments, WBCSD argues
- Exception is human rights, where U.N.'s guiding principles provide 31-point framework for accountability

November 13 - Climate-conscious brands attending the COP28 climate summit later this month will now be able to parade their climate commitments via a new charter officially endorsed by the United Nations.

The Net-Zero Transition Charter is open to companies of all shapes and sizes that can show “credible” emission reduction targets, together with a plan for their effective implementation.

The initiative, which was launched at the start of this month and will publish its first brand signatories later this week, marks the most explicit attempt yet by the United Nations to welcome brands into the fold of climate action at a COP meeting, though companies have become an increasingly visible presence at COP summits over recent years.

Despite criticism from campaign groups, who lay charges of negative corporate lobbying, their attendance is perfectly legitimate within the rules of COP. Under the U.N.-hosted Marrakech Partnership for Global Action, brands enjoy the right to participate as onlookers as one of several “non-state actors” critical to reaching the Paris Agreement goal of keeping the global temperature rise to between 2 and 1.5 degrees Celsius.

As the much-anticipated Global Stocktake will no doubt show, most emissions derive from activities dominated by private sector players (most notably, electricity and heating, transport, manufacturing, construction and agriculture).

Yet the invitation brings into sharp relief a critical issue that brands are now facing, and one that could well flare up at the U.N.-sponsored climate talks in Dubai – namely, the question of accountability.
Shipping containers are seen stacked on a container ship docked at Sydney, Australia. The Global Stocktake is expected to show that most emissions derive from activities dominated by private sector players in sectors including transport. REUTERS/Loren Elliott Acquire Licensing Rights

As recent research from the (non-U.N. affiliated) climate transparency initiative Net Zero Tracker reveals, brands are often quick to make ambitious commitments on emissions reductions but slow to deliver on them.

Of the world’s largest 2,000 companies, 929 have now set public net-zero targets, more than double the number (417) two years ago. On the face of it, that’s good. Less good is Net Zero Tracker’s conclusion that there is “very limited” evidence of robust implementation strategies.

So will a charter help? It’s unlikely, though not for lack of forethought. Among the initiative’s various criteria is a requirement for brands to show that the scientific basis of their emissions pledges is third-party verified. An obligation also exists to publish their annual progress towards a net-zero future (including via the U.N.’s own Global Climate Action web portal).

The problem is that such provisions aren’t new, and feature in a swathe of existing corporate net-zero schemes. While the precise language may differ, the basic injunction to “pledge, plan, proceed and publish” undergirds everything from the ISO Net Zero Guidelines and the Science Based Target initiative's Corporate Net-Zero Standard through to the U.N.’s own Race to Zero campaign.

While the analysts at Net Zero Tracker call for “greater specificity” and a convergence between voluntary standards, a hard-hitting position paper from the World Benchmarking Alliance argues that even if all voluntary sustainability schemes were to coalesce into single, commonly agreed standards, full accountability would still prove elusive. Entitled Corporate accountability: Closing the gap in pursuit of sustainable development, the 48-page paper calls for a strong steer from governments on what is expected of brands.

The basic logic is that no clear definition exists of what brands are accountable for, other than from keeping within the law (which is often either vague or undemanding, or both). At the same time, brands find themselves assailed by multiple expectations from an ever-growing range of stakeholders, many of which are inconsistent and sometimes even contradictory.
A Chevron gas station in, California, U.S. Chevron has set emissions-intensity targets to produce fewer emissions from each unit of energy it produces, meaning absolute emissions can still rise. Mike Blake/REUTERS Acquire Licensing Rights

As a result, the onus ultimately falls on brands to decide what guardrails they will hold to and what criteria and mechanisms they will assent to in order to prove their compliance, argues WBA’s executive director Gerbrand Haverkamp.

“If you look at the global agendas for sustainable development, virtually all of them recognise the role of the private sector in various degrees … yet what hardly any of them do is articulate the specific responsibilities of business,” he states.

The exception is human rights, he notes. Under the U.N. Guiding Principles on Business and Human Rights, brands are expected to abide by an authoritative 31-point list of principles.

The principles do not extend to a system of detailed checks and balances, but instead provide a widely accepted framework (in this case, to “protect, respect, remedy”), around which an accountability architecture can then be built.

In the case of climate change, brands and those advising them are seeking to build that architecture without an overarching steer on where their responsibilities start and stop, Haverkamp says.

Hence, the struggle for credibility. Take the oil and gas industry. It is not that brands like Shell, Chevron and BP are not measuring or disclosing their emissions, he says. They are, but they are doing so on terms essentially decided by themselves.

TotalEnergies and BP, for example, have targets to cut absolute emissions across their own operations. Shell and Chevron, on the other hand, have set emissions-intensity targets, to produce fewer emissions from each unit of energy they produce, meaning that their absolute emissions can still rise. Read more

“Reporting it not the issue. We know what direction they are going in. The problem is that they are going in the wrong direction. But governments, and fossil-fuel states in particular, haven’t made up their mind what they want to do with the oil and gas industry, so it just carries on,” Haverkamp said.

The message ahead of COP28 could not be clearer. Negotiators need to spell out in terms that leave no room for doubt what they expect, both for business in general and for individual industry sectors in particular.

Part of this articulation involves linking compliance, and non-compliance, to commercially significant rewards and penalties, Haverkamp added.

Natasha Matic, executive director of the Global Commons Alliance’s Accountability Accelerator, agrees. “We need to keep pushing regulators towards mandatory requirements because right now the decision lies with brands: if they want to act, they will; if they don’t want to, they don’t have to.”

Forward-looking brands also see the value of an authoritative delineation of where their responsibilities start and stop, particularly when it comes to indirect (or Scope 3) emissions, from their supply chains and in the use of their products, which account for around 70% of total emissions.

Olivier Blum, executive vice-president for energy management at Schneider Electric, says tracking Scope 3 emissions entails a “natural complexity” that many companies, especially small suppliers, may not have the knowledge or resources to address.

This COP marks an ideal moment for policymakers to draw an explicit line, he adds: “At COP28, the critical attention needed from governments has to be on common expectations for brands when it comes to tracking progress on their Scope 3 emissions.”

At present, brands are not only being invited to mark their own homework; they’re effectively being left to set their own questions. The latter, as a minimum, should be the job of our elected authorities. Only then will corporate accountability start living up to its name.

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