Companies Won't Keep Their Net-Zero Promises

There is nothing in it for them.

A recent study by Earth.org found that only about 4% of the World’s largest 2,000 companies meet UN emissions reduction criteria despite a record number of net-zero pledges. If we expand that analysis to the other planetary boundaries beyond climate change, we would see a similar picture.

Yes, you can blame AI.

There are several reasons for this. One of the big ones is the boom in Artificial Intelligence. As I noted in this space before, data centers that we use for all our computing needs consume from 2.5 to 3.7 percent of global greenhouse gas emissions. That is more than the aviation industry.

More AI means more energy consumption. Energy use of data centers on the European continent will grow 28 percent by 2030. This is forcing companies to choose between AI and net zero goals. Guess which one they are choosing.

Google's parent company Alphabet had a very public and ambitious net zero plan. But in 2024 it walked away from those goals, naming expanding AI as the reason. Over the past five years, Alphabet’s emissions have gone up by nearly 50%, leading Alphabet to move the goalposts. The company says it plans to invest more in carbon emissions credits. That should end well.   

Just don’t do it.

Shoe and apparel maker Nike has cut about 30 percent of its sustainability staff since the end of last year.  The company has not reached its carbon reduction targets, with emissions increasing slightly since 2015.

We didn’t mean that about net zero and diversity.

A few months ago, Tractor Supply Co., which focuses on agriculture, and livestock and is a large retailer in much of rural America, announced that it would no longer focus on diversity, equity, and inclusion and eliminated its emissions goals. The company had previously planned to reach net zero by 2040.

From sustainability leader to laggard.

For years, Unilever was seen as a leader in sustainability circles. From 2009 – 2019, under the leadership of CEO Paul Polman, the company launched it’s Sustainable Living Plan, with three main goals:

1.        Improving health and well-being for more than 1 billion people in the company supply chain.

2.        Cutting in half the environmental footprint of their manufacturing while growing the business

3.        Enhancing the livelihoods of millions of stakeholders, including smallholder and female farmers.

Paul Polman is gone, and things have changed.

Recently, the company stated that it expects to water down some of its sustainability pledges focused on plastics usage and diversity pay.

The company’s old goal was to limit virgin plastics by 50% by 2025 — the updated target now focuses on a 30% reduction by 2026. This adds up to over 100,000 tons of fresh plastic annually.

The company also dropped its commitment to use 100% biodegradable ingredients by 2030 and cut food waste generated by its operations by half by 2025.

Degrowth is the answer … but investors ain’t going to like it.

Until the health of the biosphere becomes the main goal that these companies chase, this isn’t going to change. Companies are starting to say that their net zero goals are just too ambitious and that they are adjusting them so that they are more realistic. The translation of that statement is:

We originally set aggressive emissions targets to adequately address climate change – but that was bad for business, so we are stopping that foolish practice.

I come from the financial world, and over that past decade I have seen the sustainability world grow. In those years, governments have required companies to report more about their environmental performance. Many companies have made a show of their net-zero plans and have ramped up their hiring of professionals with sustainability in their job titles. The number of sustainability or “ESG” funds and “green” financial products has exploded.  

But many of these efforts haven’t amounted to much. At worst, they were just for show or “greenwashing” from companies or investment firms who want to make more money from consumers and clients by promising them “green” things when those green things are trendy.

At best, well-meaning regulators, companies and investors are engaged in the Sisyphusian task of trying to get the world to act enough and fast enough on climate change and overshoot.

But our system, as it exists now isn’t set up for that.

If companies and investors do not put the shareholders first, they will lose their jobs, get sued, and likely both. Don’t expect companies, their leaders, or investors to solve this problem.

So that leaves it to policymakers to set the rules of the road so that disclosing scope 1, 2, and 3 emissions isn’t optional. Lawmakers can cut subsidies for oil and gas and increase them for green energy. Lawmakers can ensure transportation and agriculture do not destroy the biosphere.

But there is currently no money and no re-election in those decisions.

Until that changes, companies will keep reneging on their net zero promises and laying off sustainability staff because there is no return on that investment.

For most of human history, there was no return on investment in destroying ourselves – and we didn’t do so.

For the last 150 years of human history, there has been a very high return on investment in destroying ourselves – so we have done so.

Until that changes – we are on the glide path to oblivion.