By Marshall Geck, Senior Specialist, Stewardship (Climate Action 100+), London

Marshall Geck

In 2019, we highlighted seven major companies that committed to net-zero emissions, asserting that such commitments were gaining momentum. In 2020, we profiled another seven, concluding that these commitments had gone mainstream. As we near the end of 2021, we’re confident to declare that net-zero by 2050 commitments (or sooner) have become the norm.

As COVID-19 lockdowns around the world eased and global economic activity picked up again, the number of companies committing to net-zero continued its upward march. One need look no further than the results of the first Climate Action 100+ Net Zero Company Benchmark assessments as evidence of this. The March 2021 findings showed that 52% of the 166 focus companies targeted for engagement – which includes many of the largest and most carbon intensive in the world – had already committed to net-zero in some form.

With 2021 coming to a close, it’s time to highlight seven more major companies that rose to the occasion this year.

As a reminder, net-zero emissions by 2050 is the level of ambition the IPCC says will be necessary to hold global warming to 1.5° Celsius and avoid some of the worst impacts of climate change.

It should also be noted that this blog is not meant to be an endorsement or to indicate that the featured net-zero commitments are perfect. They are simply meant to offer a flavour of the type of net-zero ambitions we witnessed this year.

Here are seven companies who set particularly noteworthy net-zero commitments in 2021:

Coca-Cola

Sector: Food and Beverage

HQ country: USA

Market capitalisation: US$236 billion[1]

It’s hard to think of a more recognisable beverage brand than Coca-Cola. The world’s largest nonalcoholic beverage company sells its products in nearly every country and territory on Earth. In October of this year, Coca-Cola announced a commitment to net-zero emissions by 2040 across its entire value chain.

Significantly, the company’s target encompasses Scope 3 emissions, meaning the upstream emissions from its suppliers. The world’s food system is responsible for up to one third of global emissions, with most of these coming from the supply chains of food and beverage companies.

To achieve its goals, Coca-Cola said it would broaden its partnership approach to help its suppliers reduce their emissions, use 100% renewable electricity and low-carbon energy sources in its operations, cut emissions from agricultural ingredients, embrace circular economy measures, and implement a “green fleet” programme. The new 2040 goal builds upon the company’s existing science-based target to reduce emissions 25% by 2030.[2]

Sasol

Sector: Oil and gas

HQ country: South Africa

Market capitalisation: US$10 billion

In 2019 and 2020, we marvelled at how the momentum towards net-zero emissions by 2050 had extended to oil and gas companies like Repsol and BP. We believe 2021 was even more remarkable because this year the push extended to many oil and gas companies in emerging markets. Take the South African oil and gas company, Sasol, for example. The global integrated fuels and chemicals company and fifth largest company in South Africa[3] committed to net-zero emissions by 2050 in September of this year.

As part of its announcement, Sasol released a detailed report on how it intends to transition to a net-zero business model. The plan sees the company increasing energy and process efficiencies, investing in renewable energy, shifting to natural gas as a transition feedstock, and diversifying its process inputs and product offerings to include more low-carbon alternatives like green hydrogen and sustainable aviation fuels. Sasol also strengthened a previous 2030 Scope 1-2 emissions reduction target from 10% to 30% and established a new target to reduce Scope 3 emissions from the company’s energy business, aiming for a 20% reduction by 2030. [4]

Sasol has its work cut out for it and its plan is not without unanswered questions. The company’s coal-to-liquids production process is exceptionally carbon intensive, and its Secunda plant in Mpumalanga province is the largest point source of emissions in the world. Still, it was only a few years ago that getting oil and gas companies in emerging markets to commit to net-zero emissions and release such detailed climate transition plans seemed unthinkable.

China Petroleum & Chemical Corporation (Sinopec)

Sector: Oil and gas

HQ country: China

Market capitalisation: US$561 billion

Speaking of net-zero commitments from oil and gas companies in emerging markets that once seemed unthinkable, another big one that fell into this category in 2021 was Sinopec. The Chinese state-owned entity and Asia’s largest oil refiner committed to carbon neutrality by 2050 in March of this year.

Sinopec’s commitment stands out because it is 10 years ahead of China’s Nationally Determined Contribution to the Paris Agreement, which aims for the country to reach carbon neutrality by 2060 rather than 2050. China is by far the world’s largest emitter, so Chinese state-owned companies signalling increased ambition could be crucial to meaningfully addressing climate change at the global level.

To achieve its commitment, Sinopec plans to increase its use of natural gas in the near term to help China decrease reliance on coal, followed by a longer-term upscaling and pivot towards green hydrogen. The company also seeks to peak its emissions prior to the 2030 timeline set by the Chinese national government.

General Motors (GM)

Sector: Automobiles

HQ country: USA

Market capitalisation: US$87 billion

The 6th largest automaker globally[5] and icon of the American auto industry kicked off 2021 by announcing its plans to become carbon neutral by 2040 in both its products and operations. GM’s January 2021 commitment followed on the heels of a similar net-zero commitment last year by Ford and is the latest sign that a transformation of the US auto sector is underway.

To get to net-zero, GM said it would ramp up its electric vehicle models on offer, invest $27 billion in electric vehicles by 2025, source 100% renewable energy to power its global facilities, and collaborate with suppliers to reduce supply chain emissions. In a nod to the robustness of its new commitments, the company set science-based targets for its Scope 1- 3 emissions.

As transportation is the largest source of US emissions and contributes to over a quarter of global emissions, the importance of net-zero commitments from major automakers like GM cannot be overstated.

Engie

Sector: Electric utilities

HQ country: France

Market capitalisation: US$31 billion

If there was any sector where net-zero commitments were already the norm prior to 2021, it’s in the utilities sector. Engie, one of Europe’s utility giants, became the latest to commit to net-zero emissions in May of this year, aiming for 2045 rather than 2050. The global energy services company operates in over 70 countries on 5 continents.

In a press release, Engie indicated its commitment encompassed its entire value chain, which is notable given that many integrated utilities – especially those with gas distribution systems – often have overlooked Scope 3 emissions. The company said it would achieve its target by scaling up renewable energy capacity, exiting coal in all markets by 2027, and deepening its involvement in “renewable gases” like biomethane and hydrogen.

It might not be enough. The International Energy Agency’s (IEA) new Net Zero Emissions by 2050 Scenario, which was released in May 2021 and outlines a pathway for the global economy to reach net-zero emissions by 2050, found that sectors with more decarbonisation options like utilities need to reach net-zero by 2040 or even sooner to give the world a fighting chance of limiting global warming to 1.5° Celsius. Even so, Engie’s commitment is undoubtedly a step in the right direction.

Nippon Steel

Sector: Steelmaking

HQ country: Japan

Market capitalisation: US$14.9 billion

After the groundbreaking announcement from Japan in October 2020 that the country would become carbon neutral by 2050, there were rumblings that the world’s fifth largest steel producer[6] would follow suit. In March 2021, Nippon Steel officially released its Carbon Neutral Vision 2050 laying out how it would achieve the same feat.

To make its goals reality, Nippon Steel said it would build upon existing programmes to implement more hydrogen, enhance energy efficiency, develop electric arc furnace plants, increase use of carbon capture and storage, and ultimately create a 100% direct hydrogen reduction steelmaking process. The company’s 2050 goal was accompanied by an interim target to reduce emissions 30% by 2030.[7]

Steelmaking is a “hard to abate” sector, meaning it currently has few readily available and cost-effective options to decarbonise. However, as steel represents 7% of the world’s energy-sector CO2 emissions, getting to net-zero emissions globally means it will be crucial that major steelmakers like Nippon Steel rise to the challenge.

Boral

Sector: Cement and construction materials

HQ country: Australia

Market capitalisation: US$6.75 billion

Rounding out the list this year is the net-zero by 2050 commitment from Australia’s largest construction materials and building products company. In September, Boral announced what it claims to be “the most ambitious emissions reduction targets in the global construction materials industry.”

To back up this bold statement, Boral is seeking third-party validation. Namely, the company is looking to have its interim 2030 targets – which call for a 46% reduction in absolute Scope 1-2 emissions as well as a 22% reduction in Scope 3 emissions per tonne of cementitious materials[8] – validated by the Science-based Targets Initiative.

To reach these targets, Boral said it would transition to 100% renewable electricity, increase use of alternative fuels at its cement kilns, improve energy efficiency, accelerate adoption of lower-carbon concrete products, optimise supply chain logistics, explore alternative fuel fleet options, deepen its involvement in carbon capture and storage technologies, and prioritise suppliers with lower emissions intensities.

The new “normal”

Only three years after the IPCC published its Special Report on Global Warming of 1.5° Celsius, companies who have committed to net-zero emissions by 2050 (or sooner) increasingly no longer hold an exceptional status. As demonstrated by the seven companies above, the imperative to set such commitments has left its mark on all sectors and geographies of the world.

Companies that haven’t made a net-zero commitment now seem officially late to the game. Today, the conversation is shifting from whether major companies will ever commit to net-zero emissions to how they plan to achieve such ambitions.

Not all net-zero commitments are created equal, and many of them are lacking in crucial details, scope, and near-term accountability. This has led to the proliferation of tools to assess the credibility and quality of company climate transition plans, with a prominent example being the Climate Action 100+ Net Zero Company Benchmark. This has also led to a new trend of companies putting their climate transition plans up for a shareholder vote – as popularised by the “Say on Climate” campaign. Such votes come with their own set of risks and opportunities.

Meanwhile, the global climate outlook is still precarious as ever. While COP26 in Glasgow saw some encouraging developments, the incremental decline in absolute global emissions that is needed to keep 1.5°C within reach is still nowhere to be seen. In addition, new analyses like the IEA’s long-awaited Net Zero by 2050 Scenario have demonstrated how little time the world has to make the transformational changes in economies and societies that are needed to limit global warming to safe levels. To quote billionaire-turned-climate-activist Tom Steyer: “When it comes to climate change, winning too slowly is the same as losing.”

Even so, the shift from companies with net-zero by 2050 commitments being fringe outliers to the new normal is cause for optimism.

Working with investors through initiatives like Climate Action 100+, the PRI will work hard in 2022 to secure further net-zero commitments from companies, and more importantly, more credible net-zero transition plans.

 

 

This blog is written by PRI staff members and guest contributors. Our goal is to contribute to the broader debate around topical issues and to help showcase some of our research and other work that we undertake in support of our signatories.Please note that although you can expect to find some posts here that broadly accord with the PRI’s official views, the blog authors write in their individual capacity and there is no “house view”. Nor do the views and opinions expressed on this blog constitute financial or other professional advice.If you have any questions, please contact us at blog@unpri.org.