Fanciful ESG targets have had a reality check, but this could be just what we need. By David Burrows.
It has all kicked off here in Scotland this week. First minister Humza Yousaf has resigned just days after he pulled the plug on the three-year old Bute House Agreement coalition deal with the Scottish Greens. “The SNP needs the freedom and flexibility to ensure we move Scotland forward,” Yousaf said at a press conference.
The trouble started with Scotland actually not moving forward fast enough to achieve its climate targets. On March 20th, the Climate Change Committee (CCC) said Scotland’s 2030 goals are “no longer credible”. The country has “laudable ambitions to decarbonise, but it isn’t enough to set a target; the government must act.” So, the government dropped the target – to reduce emissions by 75% by the end of this decade – and this left the Scottish Greens wondering what kind of agreement they’d got into.
Cue chaos. “It’s quite a thing to see this stuff, and I suppose this is a reminder of how important climate policy can be,” said Chris Stark who stepped down as CCC boss last week (having announced his departure in January). Consider the cat suitably placed amongst the pigeons.
This is not new ground for Scotland, mind. A January 2021 landfill ban on biodegradable municipal waste has been delayed until the end of 2025, for example – this after ministers realised shortly before the ban was due to come into force that it just wasn’t possible. They blamed industry and councils, who blamed the government. Much like the carbon target there was no comprehensive delivery strategy in place.
Indeed, this is a country that has been great at setting green targets but too often left red-faced when the deadlines come knocking.
World-leading PR
Of course, it’s not just in Holyrood that politicians revel in such PR-grabbing ambition. The UK Government is leading the world in efforts to tackle plastic pollution … according to the UK Government. “We have so far introduced a plastic packaging tax on packaging that contains less than 30% recycled plastic, a ban on microbeads in rinse-off personal care products, and measures to restrict the supply of plastic straws, plastic drink stirrers and plastic-stemmed cotton buds,” it claimed in 2022.
Two years on and a whole raft of other policies to curb plastic pollution have yet to be signed off. A deposit return scheme is now delayed until 2027, for example. Indeed, I am not sure if any of the deadline dates set out in the original Resources and Waste Strategy 2018 have been met. And waste levels in the environment department are actually going the wrong way (ah, leadership). The CCC also says it has little confidence in the UK meeting its carbon reduction commitments, either.
“Unfortunately, the reputational benefits of setting ‘world/industry leading’ targets seem to far outweigh the consequences of missing them,” a consultant told me last month.
Companies are certainly playing the game too. Targets have been set and promises made, but there isn’t enough fuss when they are missed. Has anyone checked who committed to what during that flood of net-zero commitments running up to, during and just after COP26 in Glasgow?
Wrap recently found that progress against all three of the Courtauld Commitment 2030 targets (covering water, waste and greenhouse gas emissions) needs to speed up rapidly or they face failure. Its plastics pact will also fall short, but another five-year commitment is being planned. Progress reportson WWF’s shopping basket initiative are not for the faint-hearted, either.
The Science-Based Targets initiative, the go-to charity for verified net-zero targets and plans whose funding is closely tied to corporate interests, is under pressure now too. Hot on the heels of the will-they-won’t-they allow carbon offsets controversy is a Science paper, led by Utrecht University, highlighting that adopting a target doesn’t necessarily cause a drop in actual emissions. “Companies setting their own individual targets risk complacency that we can’t afford,” explains co-author, Professor Joeri Rogelj, from Imperial College London.
All eyes on SBTi
Mike Barry, the former head of Marks-and-Spencer’s Plan A programme and now a respected advisor on sustainability to food companies, says he has spoken to a lot of people in the corporate world of late who are at best confused, at worst aghast about the uncertainty that the SBTi stories have caused. “With so many short-term economic and geopolitical headwinds building it won’t take much for some c-suites to use the situation to soft peddle, even row back on their commitments,” he explains.
Barry is a man I have spoken to about targets before. It’s worth revisiting this observation in 2022 on net-zero targets: “People are underestimating how hard some of this is. This is a multi-decade systemic shift in how we operate the economy, how we operate society and how we consume stuff – all played out against a backdrop of short-term issues.”
And let’s not forget the swaths of businesses that have yet to even commit to net-zero, let alone start devising a plan or having it verified. And that’s why I think Unilever’s recent move to update some of its targets is an extremely brave one. The FMCG giant was widely panned for “watering down” some of its targets, and honing in on the areas where it can really make a difference: plastic, climate, nature and livelihoods. Given its ESG poster child status, will this result in a general slow-down in sustainability?
“Our updated commitments are very stretching, but they are also intentionally and, unashamedly, realistic,” argued CEO Hein Schumacher. “We want to set sustainability ambitions which are credible, which we believe we can deliver against, and which have real positive impact.”
I noted recently that the move impressed me. This may well be an offer to anxious shareholders who feel purpose has denied them profits. The targets remain pretty challenging, though, and I hope this is Unilever showing leadership at a time when action is desperately needed over ambition.
Setting achievable targets and promising action from the off is actually a gamble. Come up short on seriously stretching ones and it’s generally a case of ‘better luck next time’ (which is where most companies are on science-based emission reductions and plastic currently). Miss the new “realistic” green targets and it’ll leave Unilever’s Schumacher red-faced and ridiculed – and the race on to find a new poster child for ESG.
It’s time for a little maturity, and some pragmatism over PR. This is the future of our planet we are talking about, after all.
