The Great Carbon Con Is Coming to an End
A year after COP26, the United Nations Climate Change Conference which took place in November 2021, the number of FTSE 100 companies vowing to achieve net zero emissions by 2050 grew by 37 percent to 82 percent. Among the pledgers were some of the world’s biggest companies: Amazon, Apple, Ford, IBM, JP Morgan, Mars, and many others. But climate action is not just on the minds of industry giants: it’s a growing concern for every business as scrutiny grows.
Making a pledge is the easy part. In 2023, we will see businesses held to account for what they actually deliver. Organizations will be forced to show that the commitments they’ve made are meaningful, providing transparent and ongoing proof that they are taking necessary actions to reduce their carbon emissions.
Growing skepticism of over-ambitious, opaque, and even fraudulent climate pledges is turning up the heat on businesses. Already, we’re seeing customers voting with their wallets, employees choosing employers based primarily on net zero credentials, and investors making choices about what to fund based on tangible climate action. To put that in numbers, as many as 60 percent of millennials are willing to pay more for truly sustainable products; two-thirds of people are more likely to work for a company with strong and meaningful environmental policies; and research by Amazon has found that as many as 83 percent of investors want to invest in more sustainable startups.
For too long, businesses have been pouring investment into traditional emissions-avoidance offsets—paying someone else to reduce future emissions to compensate for their own. Emissions-avoidance offsets include clean cookstove projects, investment in renewable energy, and forestry protection.
As attention turns to delivery in 2023, awareness will grow that these traditional offsets are at best a distraction that doesn’t count towards net zero, and at worst are downright fraudulent. Until now, carbon avoidance offsets have been an easy, cheap way for businesses to tick the box of sustainability, letting them spin a story about commitment and willingness to tackle the climate crisis. In 2021, more than $1 billion of offsets were sold.
In 2023, businesses feeling pressure from all sides will need to look to other solutions if they want to demonstrate delivery. For instance, awareness of carbon-removal technologies has grown. There is now a broader understanding and acceptance that these technologies, which actively suck carbon out of the atmosphere through direct air capture, enhanced weathering, and other methods, are critical to reaching our global climate goals. And progress has been made—in 2022, a host of major players in Silicon Valley, including Google, Meta and Shopify, formed an alliance to commit $925 million in carbon removal by 2030. While this is a promising step, access to and investment in carbon-removal technologies must become mainstream if they are to go from being in their infancy to scaling at the pace the planet needs them to.
In 2023, a climate pledge will only be a baseline, the bare minimum. People across the board will demand more from the business they work for, spend money with, and invest in. Those that can’t demonstrate tangible progress towards their net zero goals will be left behind.