Questionable accounting tactics and undisclosed information surrounding corporate climate action initiatives sparks discussions on enhanced regulation
The 2025 Corporate Climate Responsibility Monitor (CCRM) has revealed that the net zero commitments of 20 global brands in the technology, fashion, automotive, and agrifood sectors are failing to align with the rapid and deep emissions reductions required by the Paris Agreement’s 1.5°C target.
In the technology sector, emissions from data centers and hardware production are expected to triple by 2030. Lack of widespread adoption of renewable electricity in data centers and supply chains, and competing accounting frameworks, are causing confusion and undermining transparency. Tech firms, such as Amazon, Apple, Google, Meta, and Microsoft, are relying on outdated market-based accounting for their Scope 2 emission calculations, which allows them to claim a reduction in emissions from activities such as buying renewable energy certificates (RECs), even when their actual, location-based emissions may not have dropped at all.
The fashion sector is also falling short, with major gaps in fully electrifying manufacturing processes and continued reliance on false solutions such as biomass and fossil gas. Leading firms like Shein have taken little meaningful action, indicating uneven performance in the sector. Notable exceptions include H&M's efforts to increase the use of renewable electricity in its supply chain and Mars' attempts to weed deforestation out of its supply chain.
In the automotive sector, Toyota's decarbonisation targets are not 1.5°C-aligned, and it has no commitment to phase out internal combustion engines despite emissions increasing significantly. Progress in increasing the share of electric vehicles (EV) sales has been mixed. All of the brands assessed except for Stellantis have made insufficient progress to phase out internal combustion engines.
In the agrifood sector, concerns linger around traceability and most agrifood firms, except for Brazilian meat giant JBS, have committed to sourcing only deforestation-free commodities by 2025. Limited ambitious targets on methane emissions and plant-based protein transition are a concern, with only Danone having a credible methane reduction target and plans for plant-based protein, but even this is partial.
The report recommends that voluntary standards need to complement these efforts by focusing more on enforcement and measurable impact. Regulators are called for to create an environment where corporate climate action is a business necessity and to step in to bring greater accountability to climate targets. The authors of the report were unable to update the emission reduction figure this year due to confusing and misleading accounting practices, poor disclosures, and overuse of questionable solutions.
The top performing companies in this year's report were all headquartered in the European Union, where large companies are required to disclose their environmental and social impacts. The report recommends that target-setting frameworks require companies to set transition-specific targets, such as food firms shifting to plant-based food or automakers producing more EVs.
The best performing firms achieved only a "moderate" integrity rating, and no company's climate programmes were rated to have a high or even reasonable level of integrity. JBS doesn't disclose whether it will use land-based carbon removals, and Shein's 2030 targets allow the ultra-fast fashion brand to more than double its emissions compared to 2021.
The report calls for regulators to prioritise 24/7 matching of renewable electricity procurement and for governments to put in place a binding legislative and regulatory framework that sets the direction for individual sectors and the economy as a whole. It also suggests that sustainability frameworks should focus more on enforcement and measurable impact to ensure that corporate climate strategies align with the Paris Agreement’s 1.5°C target.
- The tech sector's reliance on outdated market-based accounting for Scope 2 emissions, such as buying renewable energy certificates (RECs), is leading to confusion and undermining transparency, as revealed by the CCRM.
- The fashion sector, despite firms like H&M and Mars attempting to make strides in renewable electricity and deforestation-free supply chains, continues to rely on false solutions like biomass and fossil gas, indicating a need for more comprehensive action.
- In the automotive sector, although some progress has been made in increasing the share of electric vehicles (EV) sales, several brands, including Toyota, have not committed to phasing out internal combustion engines, hindering progress towards net zero emissions.
- The agrifood sector faces challenges in areas like traceability and ambitious target-setting for methane emissions and plant-based protein transition, with only a few companies, such as Danone, showing credible progress.
- To ensure corporate climate strategies align with the Paris Agreement’s 1.5°C target, sustainability frameworks need to focus more on enforcement and measurable impact, and regulators should prioritize 24/7 matching of renewable electricity procurement and implement binding legislative and regulatory frameworks.
