What you’ll learn below:
- How to find the fine line between ambitious and overly aspirational sustainability commitments
- Why you should still develop real sustainability goals
- How to protect your strategy against critiques
Intro
Companies are getting into trouble for making overly ambitious sustainability claims. If this trend hasn’t gotten the attention of your company’s counsel and board, it will. In this edition of Both True, I cover what you need to know—and how you can inoculate your sustainability commitments against charges that they “require substantiation” or even are “bogus.”
Both of these things are true:
- A broad swath of stakeholders still expect your company to make aspirational net-zero commitments.
- Companies are being held to account—fairly or unfairly—for such commitments.
The situation
Example #1: In February, JBS—the second-largest food company in the world—made headlines for committing to achieve net zero emissions by 2040. Shortly thereafter, the National Advertising Division (NAD) of the BBB (formerly the Better Business Bureau) recommended that JBS discontinue its claims, saying that they “require substantiation,” among other critiques.
Example #2: Delta Air Lines, one of the oldest U.S. airlines in operation, faces a class-action lawsuit for its carbon neutrality claims, which were described in comments about the complaint as “largely bogus.”
Both developments—understandably—are putting wind in the sails of anti-ESG voices within organizations. How can companies navigate the still-widespread expectation that they make net-zero commitments without engaging the risks of such charges?
JBS: Leading or Just Exploring Net Zero?
JBS is the largest animal protein producer in the world, so the headlines from NAD’s recommendation grabbed my attention. NAD focused in on the absolutist phrases in JBS’s communications around its net-zero commitments, such as
- “JBS is committing to be net zero by 2040”;
- “Global Commitment to Achieve Net-Zero Greenhouse Gas Emissions by 2040”; and
- “Leading change across the food industry and achieving our goal of net zero by 2040 will be a challenge. Anything less is not an option.”
While to some these claims may seem harmless and even serve to inspire the organization to rise to the occasion, NAD argues that they are misleading and “create reasonable expectations” from consumers that the company does not substantiate. Specifically, NAD argues that: “JBS, however, does not have a formulated and vetted plan at present. Rather, JBS is in the exploratory stage of its effort directed toward the net-zero 2040 goal.”
JBS challenged those claims, arguing that it is in the process of implementing a documented plan, has made significant preliminary investments, and already has buy-in on the claims from the Science-Based Targets initiative. Despite this appeal, NAD recommended that JBS discontinue its initial claims and consider “narrower truthful and not misleading claims” instead.
Delta: Caught in the Carbon Offset Morass
Delta Air Lines faced higher stakes pushback for its sustainability claims in a class-action lawsuit filed in May. According to the filing, Delta inaccurately described itself as the “first carbon-neutral airline.” In the spirit of much of the offset pushback we are seeing, the airline heavily relied on claims that its carbon offsets canceled out its carbon emissions. The claims of carbon were based on offsets intended to protect an Indonesian swamp forest and promote wind and solar projects. A Delta spokesperson says the lawsuit is “without legal merit.” Delta now claims to have “fully transitioned its focus away from carbon offsets” and to be focusing its sustainability strategy on decarbonization and sustainable aviation fuel instead.
Real Sustainability: Grounding Ambition in Planning and Substance
I have long argued for the importance of sharing net-zero ambitions with our stakeholders. These two case studies draw an important distinction between ambitious claims and ambitious action. At Adamantine, we advise our clients on landing on the right side of this divide through the sincerity and quality of their company plans and execution. Shareholders and stakeholders alike are aware that achieving certain sustainability goals is largely dependent on technological advances that are still in the pilot phase of development. It is important that organizations ground their ambition in planning and substance so as to not have ambition tip into illusion. This realism is the essence of real sustainability.
An admittedly extreme example of an organization grounding its aspiration in substance is ExxonMobil. The company features a “cautionary statement warning” on its website to address “statements of future ambitions, goals, events or conditions” with regard to its net-zero-by-2050 emissions reduction goal. Exxon details which activities it plans to use to drive down emissions, with the caveat that continued technological advances and policy support will affect its sustainability goals. The company also notes that future market factors will affect the “emission-reduction roadmaps” that will drive it to reduce its Scope 1 and Scope 2 emissions with the long-term goal of net-zero Scope 1 and Scope 2 emissions by 2050. The details listed by the company in addition to the roadmaps—its diversified portfolio, and current and future investments in low-carbon fuels and sequestration technologies—provide evidence that the company has capital allocations to back its emissions commitments. Although net zero by 2050 is an ambitious goal, ExxonMobil isn’t making claims without grounding or a plan.
Seize the day
Leading companies should continue to make ambitious but real sustainability goals. When evaluating your sustainability strategy, consider the following:
- Review your current commitments. Evaluate your strategy to see if it still works in today’s political reality and in line with technological advances. Reassess any commitments that are so ambitious they are untethered to actual plans. Can you build a plan to implement them? Then do so. Otherwise, don’t be afraid to scrap goals that are no longer realistic.
- Make commitments with substance. This will require capital allocation, detailed plans, interim targets, internal governance, and supportive processes backed by company leadership. Your company’s sustainability strategy should consist of milestones, short- and long-term goals, and checkpoints to ensure that your strategy is working.
- Set checkpoints for reevaluation and, if necessary, change directions. The commitments you’ve made should be revisited periodically by means of a strong process for evaluation and updates.
Thank you to LaTorria Sims for her writing contributions on this piece. Need help devising real sustainability plans that support your ambitions? Reach out—Adamantine can help. Enjoying what you’re reading? Please share this Both True with three colleagues.
To the devilish details,
Tisha
