What’s Really Behind Corporate Promises on Climate Change?

For the past several years, BlackRock, the giant investment firm, has cast itself as a champion of the transition to clean energy.

Last month, Laurence D. Fink, BlackRock’s chief executive, wrote that the coronavirus pandemic had “driven us to confront the global threat of climate change more forcefully,” and the company said it wants businesses it invests in to remove as much carbon dioxide from the environment as they emit by 2050 at the latest.

But crucial details were missing from that widely read pledge, including what proportion of the companies BlackRock invests in will be zero-emission businesses in 2050. Setting such a goal and earlier targets would demonstrate the seriousness of the company’s commitment and could force all sorts of industries to step up their efforts. On Saturday, in response to questions from The New York Times, a BlackRock spokesman said for the first time that the company’s “ambition” was to have “net zero emissions across our entire assets under management by 2050.”

As the biggest companies strive to trumpet their environmental activism, the need to match words with deeds is becoming increasingly important.

Household names like Costco and Netflix have not provided emissions reduction targets despite saying they want to reduce their impact on climate change. Others, like the agricultural giant Cargill and the clothing company Levi Strauss, have made commitments but have struggled to cut emissions. Technology companies like Google and Microsoft, which run power-hungry data centers, have slashed emissions, but even they are finding that the technology often doesn’t yet exist to carry out their “moonshot” objectives.

“You can look at a company’s website and see their sustainability report and it will look great,” said Alberto Carrillo Pineda, a founder of Science Based Targets initiative, a global effort to assess corporate plans to reduce emissions. “But then when you look at what is behind it, you’ll see there is not a lot of substance behind those commitments or the commitments are not comprehensive enough.”

President Biden is also placing a big emphasis on climate change and has rejoined the Paris agreement. But determining how hard companies are really trying can be very difficult when there are no regulatory standards that require uniform disclosures of important information like emissions.

Institutional Shareholder Services, a firm that advises investors on how to vote on board elections and other corporate matters, uses company data and its own analysis to assess what corporations are doing to reduce emissions. Just over a third of the 500 companies in the S&P 500 stock index have set ambitious targets, it found, while 215 had no target at all. The rest had weak targets.

“To realize the necessary emission reductions, more ambitious targets urgently need to be set,” said Viola Lutz, deputy head of ISS ESG Climate Solutions, an arm of Institutional Shareholder Services. “Otherwise, we project emissions for S&P 500 companies will end up being triple of what they should be in 2050.”

There has been some progress by companies that have rigorous targets. In a report last month, Science Based Targets, which was started by the environmental groups and hundreds of businesses brought together by the United Nations, said the 338 large companies around the world for which it had sufficient emissions data collectively reduced their emissions by 25 percent between 2015 and 2019.

Often large companies in the same industry have very different records.

For example, Walmart discloses its targets for emissions reductions and the progress it has made to the CDP, including a goal for emissions from its suppliers, and its plan has been vetted by Science Based Targets. But Costco doesn’t expect to have commitments to reduce emissions until the end of next year. Costco executives declined to comment.

Netflix is often compared to technology giants like Google and Microsoft. But Netflix has yet to set a target for reducing the emissions caused by its offices, production activities and the computer servers it uses. “Climate action is important, and we’ll announce our plans in the spring, which will include targets based on climate science,” the company said in a statement.

Slashing emissions is difficult. Businesses must reliably measure how much carbon dioxide and other greenhouse gases they are responsible for. Then companies have to find cleaner energy sources without hurting their operations. Where they can’t find cleaner substitutes, businesses often pay others to reduce emissions or remove carbon from the atmosphere.

The task gets even harder when companies begin the process of reducing so-called Scope 3 emissions — pollution caused by suppliers and customers. At oil companies, for example, Scope 3 would include emissions from cars that use gasoline.

BlackRock, with $8.7 trillion of assets under management, including stakes in many companies, clearly faces a daunting task. The company doesn’t directly own most of the shares or bonds it buys — it manages them for pension funds, other corporations and individual investors — limiting how much climate activism it can pursue. In addition, most of its investment products track indexes like the S&P 500, so it inevitably ends up managing stocks of fossil fuel companies.

Many Wall Street firms have made pledges to get to net zero emissions from their lending and other financial activities but have not made clear whether that goal applies to the stocks and bonds they manage for customers. BlackRock’s decision to include all the assets it manages could pressure other financial giants to make similar commitments, but it could rankle fossil fuel industries and their political supporters in Congress.

Later this year, BlackRock is going to announce an interim target for how many of its investments will have achieved, or be on their way to, zero emissions in 2030.

Still, BlackRock is careful about the language it uses when describing what it will do to push businesses in its portfolios to reduce emissions — for which it has been criticized by people who want the firm to take a more activist stand. In a recent letter, the company said it was intent on “increasing the role of votes on shareholder proposals in our stewardship efforts around sustainability.”

“This could mean a lot of things and — as always — the proof is in the pudding,” Ms. Lutz of ISS said.

Ed Sweeney, a company spokesman, said BlackRock had recently voted for a significantly higher number of shareholder proposals aimed at making companies greener compared with previous years. And in a client memo sent Wednesday, the firm said it might vote against directors and management at companies that it determines do not have clear climate disclosures and credible environmental plans.

“While we recognize that the transition to net zero is at different stages based on industry and region, through a combination of engagement with management teams and boards of directors and holding companies accountable for insufficient progress through our voting on director elections and shareholder proposals, BlackRock will continue to focus on this important issue,” Mr. Sweeney said in an email.

Other companies that have pledged to cut emissions face different challenges, including coordinating with suppliers and partners.

Consider the apparel industry. Much of its contribution to climate change comes from its supply chain. The clothes that Levi Strauss and others put their labels on are often made in factories in places like China, Pakistan and India that remain reliant on coal-fired power plants. The clothes are transported on ships and planes that burn diesel and jet fuel.

Even so, when Levi Strauss rolled out its 2025 climate action strategy three years ago, its chief executive, Chip Bergh, said, “We believe it’s time for businesses to start playing a larger role in fighting the world’s most pressing problems, like climate change.”

The company set a Scope 3 emissions target. But Science Based Targets said in January that emissions from Levi’s supply chain were not falling and had grown by 13 percent between 2016 and 2019.

Jeffrey Hogue, Levi Strauss’s chief sustainability officer, said that calculation was incomplete because the company could not yet take credit for many interventions and investments it has made with suppliers. He said that would happen once the apparel industry decides on a method for calculating the advances suppliers have made in cutting emissions, particularly for factories that sell to multiple companies.

“We believe we are way better than 13 percent,” Mr. Hogue said. But he said he could not confidently give his own estimate, adding, “We are working with the industry to create more accuracy and precision in the number.”

Gary Cook, the global climate campaigns director of Stand.earth, an environmental group, was skeptical. “They set an aggressive target and they are struggling with that,” he said.

Cargill, one of the largest privately owned American companies and a major middleman that works with farmers and food companies around the world, has attempted to become a strong voice on climate change but has struggled to meet its goals.

The company is a big purchaser of Brazilian soybeans, which are often grown on land that was previously forested. In 2010, Cargill promised to meet a “net zero” deforestation goal by 2020, but the company did not succeed and has extended its target to 2030. “Our commitment on deforestation has not wavered,” said Jill Kolling, Cargill’s vice president for global sustainability.

The company’s plans show how emissions could go up over all even when a business has set a goal to cut them. Cargill wants to reduce its emissions in its global supply chains by 30 percent per ton of production by 2030, a target it made no progress on at the time of measurement in 2019, according to Science Based Targets. But overall emissions in its supply chains may not fall by that amount because of increases in production. “It depends on how our business grows, and that’s hard to predict,” Ms. Kolling said.

By contrast, deep-pocketed tech firms have probably made the most progress. Now they are setting even more ambitious targets.

Google wants all its operations to be consistently powered by energy sources that do not release greenhouse gases by 2030, but that could be difficult to achieve because the output of wind and solar farms is still small in some countries. Microsoft wants to be “carbon negative” by 2030 even including Scope 3 emissions. That goal will almost certainly require extracting carbon dioxide from the atmosphere. Those technologies are nascent and could be very expensive.

And for all these ambitious targets, even some executives argue that the current voluntary approach won’t ensure the required reduction in emissions.

“If we are going to achieve a net-zero carbon economy for real, we will need everyone to act,” said Lucas Joppa, Microsoft’s chief environmental officer. “And that means action can’t be voluntary. We need requirements and standards that everyone is expected to meet.”