The planet is warming at a record pace. So why are many companies retreating from their climate targets?

In what is becoming something of a trend, a number of companies are abandoning their carbon emissions targets in a year scientists have determined is likely to end up being the hottest on record.

Earlier this month, Volvo announced it was dropping its goal of having a fully electric lineup of vehicles by 2030.

In the summer, Air New Zealand said it was abandoning a pledge to reduce its emissions by about 29 per cent by 2030.

And in March, Shell announced it was easing its target of reducing the total "net carbon intensity" of all the energy products it sells by 20 per cent.

"I don't think [the trend] is really new, but given the state of the world, it's more apparent," said Charles Cho, a professor of sustainability accounting and the Erivan K. Haub Chair in business and sustainability at the Schulich School of Business at York University in Toronto.

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The message from a lot of these companies is that meeting their climate targets has become too costly, a theme emphasized by some American banks last month at NYC Climate Week, an annual gathering for organizations to discuss global warming.

After more than 190 countries signed the Paris Accord in 2015 codifying an international push to keep global temperatures well below 2 C warming from pre-industrial levels many companies made bold climate pledges.

A lot of them promised deep emissions cuts. Many said they'd reach net zero that is, modifying their operations so their net emissions were zero by 2030.

But Cho says a lot of them didn't really specify how they would get there. And now, a decade later, in the absence of any meaningful enforcement for countries and companies alike, many companies are realizing those goals are unattainable.

"I think there was a rush to make those targets visible on their [corporate] reports, but I think they spoke too fast," said Cho.

A variety of factors

The stated reasons for these retrenchments vary. For example, Air New Zealand has blamed its decision on poor access to efficient planes and sustainable aviation fuel.

Volvo has cited stagnant demand for electric vehicles and inadequate charging networks, while Shell emphasized continuing demand for oil and gas and uncertainty about the speed of the global energy transition.

Andrea Amaize, director of risk and sustainability consulting at professional services firm Forvis Mazars Canada, said the COVID-19 pandemic and accompanying inflationary pressures, along with government policy changes,made some companies reassess their investments in emissions reductions efforts.

"Obviously with the pandemic and inflation, there has been financial strain," said Amaize.

In some cases, climate action has become more challenging with the emergence of a new revenue stream. Take Microsoft and Google, which admit their investments in AI infrastructure and the energy that requires make it impossible to meet their net zero targets.

Amaize said another reason corporations may appear to be retreating on their climate targets is a phenomenon she calls "green-hushing." That is, as a result of anti-greenwashing legislation such as amendments to Canada's Competition Act under Bill C-59, some companies might be reluctant to tout their environmental measures for fear of being sued for false claims.

A prominent example is the Pathways Alliance, a consortium of Canada's six biggest oilsands companies, which removed almost all content from its website and social media feeds in June in response to C-59.

In a statement to CBC, Kendall Dilling, president of Pathways Alliance, said that while the consortium wants to share its climate action, "by giving private entities greater powers to launch legal action against companies making public environmental representations, the changes [to the Competition Act] open the door to potentially frivolous litigation that would be costly and time-consuming for companies to defend against."

Cho said "anti-greenwashing legislation [is] very welcome."

No universal standard

For all the good intentions around climate action, according to Corporate Knights, a magazine and climate accounting organization, more than half of the world's 2,000 largest publicly listed companies don't even have a formal net zero goal.

As a recent article in Grist pointed out, without a single agreed-upon standard for assessing net zero targets, it's hard for any company or country to make meaningful commitments. To that end, a London-based group called Science-Based Targets (SBTi) has established a standard based on what is scientifically necessary to meet net zero goals, and has invited financial institutions to be part of a pilot.

Cho cites clothing maker Patagonia and computer hardware manufacturer HP as companies taking laudable climate action, which includes not only significant emissions cuts in their operations but also accounting for Scope 3 emissions, which are not directly created by the companies in question but are emitted further down the value chain (for example, in transporting their goods or in the organization's investments).

Cho said at the heart of it, climate action is mainly determined by profit.

"Large companies are very driven by their fiduciary duty to serve the shareholders only, and at the end of the day, they have to make as much money as possible," he said.

While that may be an underlying factor, investors are actually serious about climate action, says Danielle Fugere, president and chief counsel at As You Sow, a California-based organization that represents shareholders on social and climate issues.

"Why do investors care about companies setting climate targets and meeting those targets? As a company, if you are not transitioning along with the rest of the globe, you will be left behind," said Fugere. "You will not be able to take advantage of opportunities as the world transitions from fossil fuel-based energy to clean energy, as new products are developed."

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Amaizeemphasizedthat companies need to develop and disclose climate transition plans, as investors and regulators increasingly expect them to do so.

This is vital, Fugeresaid, because the physical impacts of climate change from flooded transportation routes to crop failure as a result of drought are increasingly disrupting the cost and flow of goods and services.

"Systemically, business can't get done in a world that's being battered by climate change," Fugere said. "We are looking at systemic failures already, and we're barely above 1.5 degrees."