The Wall Street Journal published an excellent article today regarding corporate net zero pledges, referring as well to data pubished in the Corporate Climate Responsibility Monitor 2023, which looked at the progress made by 24 major companies that "put themselves forward as client leaders." The report aims to "distinguish between real climate leadership and unsubstantiated greenwashing." As the WSJ reported,

"The 22 companies with 2030 targets would deliver an average reduction of 15% of their real emissions, far below the 50% target the United Nations’ Race to Zero campaign endorses. The report also raised concerns about plans that rely on carbon offsets, provide misleading disclosures and exclude emission sources in supply chains."

As the WSJ article and CCRM report note, many corporations have adopted aggressive pledges to reduce or entirely eliminate all net carbon emissions from their footprints.  An example of such a pledge might be to make a corporation "net zero" or "carbon neutral" by 2030.  Such commitments typically include reductions in direct emissions and, especially with respect to latter years of the pledge, the purchase of carbon offsets to go the "last mile" towards zero net emissions.

The problems observed by the authors fall into two buckets: insufficient direct emission reductions, below what would be expected to meet their long-term pledges, and the overly optimistic reliance on carbon offsets of dubious value. I have written about this before.  The offset "industry" is under heavy scrutiny, as activists and others are beginning to question the true value of offsets, particularly those generated through anti-deforestation projects.  In other words, how does one appropriately account for the avoidance of deforestation?  If a forest would never have been cut down, can we say that leaving it be should be credited with offset generation?  If regulators and courts come down the "wrong" way on these questions, there will be a lot of explaining to do regarding the value of offsets already sold and those yet to be purchased, which could dramatically change, potentially imperiling myriad public climate commitments.

What could happen to company XYZ, who has publicly pledged to be net zero by 2030, relying in substantial part on the anticipated purchase of offsets to cover 2027-2030?  They may miss their goals, or their goals will be far more expensive to achieve.  If they miss the targets, they may be subject to greenwashing investigations and lawsuits -- including perhaps SEC and state AG inquiries.  

Now is the time for companies who have adopted these pledges to take a hard look at those plans and the quality of the offsets that have used or planned to use.  If adjustments must be made, it will be far less costly to do so in 2023 than in 2028.