- The Paris Agreement is a legally binding international treaty adopted by parties at COP21.
- The agreement includes commitments from countries to reduce their climate pollution.
- The agreement marks the end of the fossil fuel era with a goal to limit global warming and achieve a climate neutral world by mid-century.
The UN’s Race to Zero campaign has seen just over half of the global GDP and a third of the population covered by commitments to reach zero emissions during the 2040’s according to the World Economic Forum. Regarding the implementation of green incentives, the costs and benefits have always been weighed for businesses, but the mainstream consensus, finally, is that due to climate change, we cannot afford inaction. Below we discuss the extent to which big corporations participate.
Big Companies Going Green
Diageo already achieved a 44.7% cut in emissions between 2007 and 2019. Moving forward, the spirits maker committed to reach zero net greenhouse gas emissions from its production by 2030 and promised all packaging would be completely reusable, recyclable or compostable within the same timeframe.
McDonald’s announced goals of reducing greenhouse gas emissions by 36% in their restaurants and offices by 2030. The company plans on doing this through large-scale virtual power purchase agreements that will support wind and solar projects. A further commitment should see a 31% reduction in emissions intensity per metric ton of food and packaging across the McDonald’s supply chain. A flagship restaurant located in the Disney World Resort opened last year and is designed to generate its own power from renewable energy.
Amazon and Global Optimism announced that 20 new signatories have joined The Climate Pledge. In total 53 companies across 18 industries and 12 countries committed towards net-zero carbon in their global businesses. All 53 signatories committed to the ambitious goal set aside by The Climate Pledge to reach net-zero annual emissions by 2040, a decade ahead of the Paris Agreement.
Google announced during late 2019 that it would purchase a 1.6 gigawatt package of agreements, this includes 18 new wind and solar deals globally. This one agreement will increase the company’s total renewable procurement by 40%. A total of 720 megawatts will be generated from projects in the United States, including solar farms in North Carolina, South Carolina and Texas.
The Cost of Going Green
Richard A. Clarke, Chairman and CEO of Pacific Gas and Electric Company told Harvard Business Review that he, “believe that the cost of environmental compliance are unnecessarily high. They are the result of a regulatory system that has become inefficient and ineffective.” He cited an example where Pacific Gas and Electric installed energy-efficient lighting, heating and cooling systems in a new federal building in Oakland that resulted in an annual cost savings of $600,000. Some of the pollution-prevention measures includes recycling of materials used (electric conductors, transformers, gas pipe).
Echoing Clarke’s viewpoint on inefficient and ineffective regulatory systems, Associate Professor of Public Policy, Robert N. Stavins concludes that, “policymakers should aim to establish environmental priorities and goals that are consistent with real tradeoffs that all regulatory activities inevitably require.” Stavins pointed out that over the past 25 years the United States has spent more than $1 trillion in an effort to address environmental threats posed by commercial activities.
According to the International Finance Corporation there is evidence that investors are shifting their investments to more climate-friendly portfolios, with assets totalling more than $3 trillion, institutional investors are divesting from fossil fuels in their portfolios. Researchers at Cambridge University estimated that global investment portfolios could be impacted severely by extreme weather events, seeing losses of up to 45%.
In a report by Science Based Targets 338 large companies globally have collectively reduced their emissions by 25% between 2015 and 2019. The report estimates that a quarter of global emissions from energy and industry could be covered by the Science Based Targets initiative, which drives climate action in the private sector through enabling companies to set emission reduction targets.
Environmentalist Jay Westerveld coined the term back in 1986, but the practice dates back earlier. Greenwashing can be traced back to Westinghouse’s nuclear power division. The 1960’s anti-nuclear movement raised concerns about safety and environmental impact. The company responded through a series of ads proclaiming the safety and cleanliness of nuclear power plants. During 2013 Westinghouse made the news once again, with a fresh-faced ad about the positives of nuclear energy. Two years later the Nuclear Regulatory Commission cited Westinghouse for concealing flaws in it’s reactor designs and submitting false information to regulators.
Business News Daily’s piece on greenwashing pointed out how Chevron and DuPont have spent large sums of money on ad campaigns which focus on minimizing environmental harm, but they still continue to be among the worst polluters in the US.
Greenwashing has evolved from its early use in the 1960’s, but still remains a murky practice. Reaching environmental goals can be achievable without falling on dubious practices. New technology that allows the recycling of heat can help reduce emissions and aid companies to meet their climate obligations.