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April 22, 2022

Earth Day Special – Are beverage companies’ emissions targets ambitious enough? – focus

To mark 'Earth Day' today, Just Drinks has analysed the emissions reduction targets of 1,138 companies to find out who are leading the way and who are lagging on their commitments.

By Data Journalism Team

The theme of this year’s ‘Earth Day’ is ‘Invest in Our Planet’, calling on governments, companies and citizens to contribute to tackling climate change. “Unless businesses act now, climate change will ever more deeply damage economies, increase scarcity, drain profits and job prospects, and impact us all,” wrote Earth Day Network on its website

Since 1988, just 100 companies have been the source of over 70% of emissions, according to a study by the international non-profit organisation CDP in 2017. Pushing the private sector to contribute to reducing emissions, therefore, is a vital step to reduce global emissions. 

Most companies have some form of climate strategy in place. Without clear guidelines and accountability, however, there is a risk of unclear targets, empty promises and ‘greenwashing’.

When investigating the climate strategies of 25 major global companies, the non-profit NewClimate Institute found that the pledges made in these public strategies are often ambiguous and emission reduction commitments are limited. 

“All of the 25 companies assessed in this report pledge some form of zero-emission, net-zero or carbon-neutral target,” the researcher wrote. “But, just three of the 25 companies … clearly commit to deep decarbonisation of over 90% of their full value chain emissions by their respective net-zero and zero-emission target years.”

With the lack of regulation, there is a growing need for companies to set clear and credible targets. This is where independent certification schemes such as the ‘Science Based Targets initiative’ (SBTi) come in. The SBTi is a collaboration between not-for-profit CDP – formerly known as the Carbon Disclosure Project – the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature. Around 1,300 companies have signed up to science-based targets that are in line with the Paris Agreement goals and approved by the SBTi.  

Just Drinks analysed the emissions reduction targets of the companies in the SBTi database. Because it can be difficult to compare targets between different companies and sectors, the analysis only includes the companies with absolute targets, which are only relative to a baseline. Intensity targets – which have been excluded – are relative to a unit of economic output; a reduction of emissions per million dollars of profit, for example.

The data shows that fewer companies are committed to ‘Scope 3’ than to ‘Scopes 1 and 2’ and that the targets set for Scope 3 are less ambitious.

Scopes are categories of emissions set by the Greenhouse Gas (GHG) Protocol, a framework for reporting greenhouse gas emissions from the private and public sectors.  Scope 1 covers direct emissions from owned or controlled sources, while Scope 2 covers indirect emissions – for instance, from the generation of electricity. Scope 3 covers all other direct emissions from the value chain.

Setting Scope 3 targets as a company is just as important, if not even more, as setting targets for Scopes 1 and 2, explains SBTi: “For the majority of sectors, the largest sources of a company’s emissions lie upstream and/or downstream of their core operation”. 

Taking the average of reported targets of the companies in each industry indicates how ambitious the sector is compared to others. Calculating the average target by sector was done by averaging the percentage of the reduction target and averaging the timeframe between the base year and the target year. 

Based on an average of 105 companies, the food and beverage industry has committed to reducing 46.7% of emissions in 11 years. That's more ambitious than the average of all companies in the database: The average target is for a reduction of 44.6% in a timeframe of 12 years. 

Among food and beverage companies, Diageo and Innocent Drinks - which os owned by The Coca-Cola Co - have the highest commitments, with a reduction of emissions of 100% by 2030. On the other hand, Cargill and Mondelez International lag compared to their peers, with reductions targets of 10% by 2025.

The SBTi categorised each target set by companies based on future pathways. The trajectory can either be towards a 1.5°C, well below 2°C, or 2°C above pre-industrial levels by 2050.

To avoid the most significant consequences of climate change, the rise in global temperature needs to stay below 1.5°C above pre-industrial levels by 2050. However, the latest report from the Intergovernmental Panel on Climate Change (IPCC) shows the current trajectory will result in global warming of between 2.2 and 3.5°C. In response to the urgent need to reduce emissions further, the SBTi will “only accept target submissions of Scope 1 and 2 targets that are in line with a 1.5°C trajectory” as of 15 July, 2022. 

With a total of 72 companies, most companies with absolute and intensity targets in the food and beverages sector are in line with a trajectory towards 1.5°C above pre-industrial levels by 2050. However, 23 companies wouldn’t be able to submit their targets under future SBTi norms.

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