More than 100 companies have been "publicly removed", how difficult is it to reduce carbon emissions scientifically?
July 24, 2023, Ji'an, Jiangxi, Suichuan County, Zhufeng peak, cloudy wind turbines. (Visual China/Photo)
If the achievement of carbon neutrality is regarded as a marathon, there are many companies willing to stand on the starting line. But after the gunshots go off, only half of the fighters may actually take a step forward.
To work together, there are many "group chats" around the world – a variety of environmental initiatives that attract companies to join and promise what to achieve and when. However, if the company does not report the progress to the "group owner" in a timely manner, it may be removed from the group chat or even the name will be made public.
Among them, The Science Based Targets Initiative (SBTi), a well-known group leader, labeled 121 companies and financial institutions around the world "Commitment removed" in August 2023, and the list is growing.
Jointly launched in 2015 by the World Resources Institute (WRI), the Centre for Global Environmental Information (CDP), the World Wide Fund for Nature (WWF) and the United Nations Global Compact (UNGC), SBTi aligns with the Paris Agreement's global warming goals. Joining businesses need to set goals and submit progress regularly. In 2022, a total of 1,097 companies worldwide achieved SBTi verification of their goals. In February 2023, the UNGC and Boston Consulting Group reported that companies committed to the Science Based Targets initiative standard accounted for 35% of the total global corporate market capitalization.
The companies removed this time include 100 foreign companies such as Amazon, Schneider and Yahoo Japan, and 21 Chinese companies (including Hong Kong and Taiwan) such as Trina Solar, ZTO Express and Qinhuai Data. The move was considered "ruthless", Amazon used to be the core sponsor of SBTi, and the Earth Foundation, founded by Amazon CEO Bezos, is still a core sponsor of SBTi.
An SBTi spokesperson told Southern Weekend that the public removal of the list of companies is to increase transparency and accountability in corporate climate action, and SBTi has a responsibility to increase its ambitions in line with the increasing urgency of climate science. However, SBTi does not completely close the door, and removed companies are welcome to resubmit their goals, and after successful verification, they can rejoin the group.
It's too hard to clock in on time
A commitment to a science-based target (SBT) within 24 months is the first step to joining SBTi.
Overall, this goal is in line with the Paris Agreement: limiting global temperature rise to 2°C and working to limit it to 1.5°C. For specific companies, this includes both short-term and long-term goals, for example, a company can set a short-term target of "reducing emissions by 42% by 2030 using 2021 as the base year", while the long-term goal must meet the SBTi's net zero standard, and the company needs to achieve more than 90% carbon emissions reduction by 2050.
After submitting the pledge, the company needs to submit the goal to SBTi for verification within 24 months, similar to preparing for a marathon, planning when to run where, and how to clock in. In the past, companies that failed to meet deadlines, withdrew commitments or made changes in their operations were removed from the background by SBTi, but the new policy is to make them public.
The 21 Chinese companies (including 1 Hong Kong and 3 Taiwanese) removed by SBTi cover a wide range of industries such as logistics, photovoltaics, and information and communication technology (ICT).
Southern Weekend contacted 17 enterprises registered in the mainland, and the two companies admitted to Southern Weekend that there are currently insufficient carbon emission reduction efforts of enterprises; One explained the progress of the company's carbon reduction work; ZTO Express, Hebei Chengxin Group, Guangzhou Yayao Electric Appliances, Jiangsu Hongbang Chemical Technology Co., Ltd. and other enterprises rejected Southern Weekend's interview request; Ten companies did not respond, and Southern Weekend reporters did not search for public statements about the removal.
Enterprises are also distressed by failing to submit the "clock-in" plan in a timely manner and being removed.
SBTi's standards are constantly updated, and the latest version is version 5.1. In the July 2022 version 5.0, the minimum temperature rise of the short-term target was tightened from below 2°C to 1.5°C, and the target period that companies can set was shortened from 15 years to 10 years.
Ray Atkinson, a spokesman for Smithfield Foods, said in an email that SBTi introduced new metrics and different reporting requirements for the forest, land and agriculture sectors in September 2022, which prevented pork producers and food processing companies from submitting science-based targets by the deadline.
Companies vary in type, size, and difficulty in setting goals. After the removal, Amazon issued a statement that "developing appropriate carbon emission guidelines and practices for a large enterprise like Amazon is complex and time-consuming, so it is difficult for us to submit meaningful and scientifically accurate carbon emission targets within the stipulated time."
Currently, SBTi provides targeted target-setting guidance for 14 industries, including aluminium, apparel and footwear, aviation, construction, and information and communication technology (ICT), while the rest are required to set targets according to uniform standards.
Southern Weekend reporters found that among the 121 companies removed, the top 3 industries were food and beverage processing, technical hardware and equipment and chemical industries.
Analysis of the list of companies removed by SBTi. (Compiled by Southern Weekend Huang Siqi, Liang Shuyi Drawing/Photo)
"Emissions from these three sectors come mainly from Scope 3, i.e. all other indirect emissions generated in the value chain of the enterprise. For large enterprises, Scope 3 is the biggest carbon reduction challenge, with a linear reduction of 2.5% per annum in absolute emissions (as required by SBTi). Yan Luhui, founder and CEO of Carbon Trail, a third-party carbon emission management agency, speculates that this may be the reason why these companies have difficulty submitting targets on time for verification.
Among the Chinese companies that were removed from the commitment by SBTi, a new energy manufacturing company that did not want to be named told Southern Weekend that the company's carbon emissions from the upstream supply chain accounted for a relatively large proportion of total carbon emissions. How to jointly promote carbon reduction in the whole industry chain is the biggest difficulty faced by the new energy manufacturing industry in carbon reduction.
SBTi's Scope 1 and Scope 2 abatement requirement is a linear absolute reduction of 4.2% per year, which Yan believes is also difficult for manufacturing industries that account for more than 80% of Scope 2 emissions, such as textile or cosmetics suppliers.
Wang Jun, founder of Climate Future and author of "The Era of Carbon Neutrality", told Southern Weekend Reporter, "Submitting a commitment letter to SBTi is very simple, as long as you fill in the basic company information, you can 'join' SBTi, but the conditions for setting targets are very strict." It's like a university with little or no entry requirements, but it's hard to graduate. ”
Meeting SBTi requirements is not easy on a global scale. According to data updated by SBTi in real time, as of October 3, 2023, a total of 6,249 companies worldwide had made commitments, but only 3,540 had submitted targets on time and passed validation, accounting for only 57%. The remaining companies that have not submitted targets are still within the 24-month commitment period, and if they do not submit targets by the deadline, they are also at risk of being delisted.
Status of companies that joined SBTi as of October 3, 2023. (Screenshot of SBTi official website/picture)
Turn reactive into proactive
Many of the Chinese companies that join SBTi are not well known to the public, and most of their business is to B, and even joining SBTi may be driven by downstream brands, which many respondents called "passive participation".
Ambitious companies often engage suppliers in carbon reduction actions. "Dell's Supplier Management Code clearly requires suppliers to fulfill their SBTi commitments, and this is how many Chinese companies join SBTi." Ma Yingying, director of the climate and energy program at the Environmental Research Center (IPE), an environmental group, said.
Southern Weekend reporter counted the information of 121 removed enterprises, the top 3 countries and regions are the United States, China (including Hong Kong and Taiwan enterprises) and the United Kingdom, 23, 21 and 14 respectively; As of press time, in the total list of SBTi, the top 3 countries and regions are also the United Kingdom, the United States and China (including 225 mainland enterprises and 242 Hong Kong, Macao and Taiwan enterprises).
Ma Jun, founder of the Institute for Public and Environmental Studies (IPE), said that a group of multinational companies made net-zero pledges after the Paris Agreement, and local suppliers may be at a disadvantage in global competition if they cannot follow up on the climate pledges made by brand customers.
In August 2023, SBTi publicly removed corporate commitments while also releasing the SBTi Monitoring Report 2022, highlighting the performance of Chinese companies.
An SBTi spokesperson responded to Southern Weekend that the report shows that in 2022, the number of Asian companies setting science-based targets and commitments has grown rapidly, with China seeing the largest increase – the number of companies submitting valid targets increased by 194%, "as the source of many supply chains around the world, China's participation in the growth of SBTi could have a huge impact on Scope 3 emissions for global companies".
Policies such as carbon tariffs are forcing Chinese companies to turn passive into active and in line with international standards.
The EU's Carbon Border Adjustment Mechanism (CBAM), known as carbon tariffs, requires countries or regions that strictly implement carbon emission reduction to pay (return) corresponding taxes or carbon allowances when importing (exporting) high-carbon products. Steel, cement, aluminum, fertilizer, electricity and hydrogen, a total of six categories of commodities, were included in the first batch and will enter the substantive implementation stage from 2026.
Ma Jun said that if the carbon boundary adjustment mechanism cannot be effectively followed, the transition stage will have an impact on export enterprises, and after the formal implementation, it will increase the cost of export enterprises due to carbon tariffs.
According to the analysis of public financial reports and official website introductions, Southern Weekend reporters found that "operating international business" or "having plans to go overseas" is also a major commonality of Chinese companies that have been removed. For example, Yingquan Technology carries out manufacturing activities in China, Southeast Asia and Europe; The market of Nandu Power covers 160 countries and regions around the world; Sichuan Yongxiang, a subsidiary of Tongwei Group, regards product export and overseas investment as the future development direction of photovoltaic enterprises.
In addition to following the requirements of multinational enterprises, there are also Chinese brand enterprises that are taking the initiative to implement science-based targets. In November 2020, JD Logistics became the first logistics enterprise in China to complete the establishment of scientific carbon targets. In January 2023, Lenovo's 2050 net-zero target was officially approved by SBTi.
"Large enterprises are willing to implement the initiative, on the one hand, they can drive domestic brands to enhance their competitiveness and compete with world brands in supply." On the other hand, it can also drive small and medium-sized enterprises to realize emission reduction responsibilities and public consumption behaviors to respond to emission reduction initiatives, and jointly build the mainland's dual carbon goals. Guan Weijia, general manager of Guangzhou Jie Carbon Technology Co., Ltd., a domestic comprehensive dual carbon service provider, said.
The start time is later, and the judging criteria are the same
For Chinese companies, starting later, but the judges will not lower the standard of judgment, which is a greater challenge.
Ma Yingying also found that many manufacturing enterprises in China are still in their infancy in their carbon management level, and on the one hand, they lack a deep understanding of proper terms such as carbon targets. On the other hand, they do not have enough access to their own carbon emission data, and blindly join SBTi under the call, but it is difficult to achieve the target.
For companies that are expanding rapidly, it is difficult to increase production and reduce carbon emissions.
Guan Weijia told Southern Weekend that most of the Chinese companies that actively responded to SBTi earlier were leaders in various industries with high brand goals and a keen sense of business. Why was it removed? Rather than terms such as "dishonesty" and "greenwashing", it is more appropriate to understand that there is a deviation and incompatibility between the company's low-carbon goals and implementation pathways. "From the perspective of subjective will, this group of enterprises is by no means just shouting slogans and inaction. It must be admitted that Chinese companies' low-carbon actions started later than those of international companies, and there is currently a certain gap. Therefore, under the same goal, domestic enterprises need to make more efforts. ”
Ma Jun said that on the one hand, more digital solutions are needed to help Chinese companies achieve their goals. On the other hand, it is also necessary for SBTi to cooperate with stakeholders to develop a scientific and reasonable methodology for setting emission reduction targets based on different development stages and emission reduction responsibilities.
Will SBTi set different objectives at different stages of development, taking into account the principle of common but differentiated responsibilities? An SBTi spokesperson told Southern Weekend that "all companies are held to the same standards. Our standards do not currently distinguish between developed and developing countries, but this may be carefully reviewed in the future. ”
Looking at the Chinese companies that have joined SBTi, only a minority have been removed from their commitments. Yan Luhui believes that SBTi's public removal of corporate commitments is also a positive signal, which can urge companies to put forward goals in a more cautious and responsible manner, and cannot blindly promise. Whether or not they join SBTi, companies must have a clear "clock-in" plan to achieve any of their own carbon reduction goals. The first step is self-inspection, Yan Luhui believes that only by understanding one's own carbon emissions can we find a practical and feasible emission reduction method that is in line with the development of enterprise experience. "The core is to identify your own emission reduction hotspots and promote emission reduction in a targeted manner."
After figuring out the bottom line, companies also need to plan a feasible emission reduction path for the future.
For example, the biggest emissions of technology companies come from data center electricity, and data centers can be relocated to western provinces such as Qinghai and Ningxia, where green power supply is abundant; Consumer goods companies consume high raw materials, so they focus on finding alternative materials, and some stationery brands use renewable recycled lunch boxes as raw materials for pen barrels; At the heart of a logistics company is to reduce fuel emissions from means of transport, which can be shortened by changing modes of transport or optimizing routes with artificial intelligence.
Southern Weekend Reporter Huang Siqi Southern Weekend Intern Wang Yuan
Editor-in-charge Wang Tao