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Welcome back. We’ve previously written about the fearsomely difficult problems that the Amazon deforestation crisis presents for investors. As I discussed on the UK’s LBC radio channel, the election defeat of Brazilian president Jair Bolsonaro looks like a welcome piece of good news on that front.

Bolsonaro had presided over a culture of impunity surrounding illegal forest clearance, which reached record levels in the first half of this year. But as our colleagues in Brazil have reported, the incoming president Luiz Inácio Lula da Silva faces severe economic challenges and bitter political opposition following his deeply controversial first spell in office. The threat to the world’s biggest rainforest remains desperate.

Deforestation will be a key topic of discussion at the COP27 climate conference, which kicks off in Egypt on Sunday. I and other FT colleagues will be there for the duration, and we’ll be serving up a special edition of Moral Money every weekday until November 18, with the latest insights from the ground.

If this email was forwarded to you (or you’re reading on the website), just click here to subscribe instantly to Moral Money, in time to get all our daily COP27 bulletins.

For today’s edition, Patrick writes about corporate net zero pledges — many made at COP26 last year — and how far away companies are from their goals. And Tamami digs into supply chain data that cast an uncomfortable light on big tech companies’ vaunted green credentials. (Simon Mundy)

Promises made, promises broken: companies are missing their net zero targets

As business and government leaders fly into Sharm el-Sheikh next week for the COP27 climate summit, companies are under scrutiny for net zero carbon emissions pledges from last year’s COP26.

Almost all of the companies that have made net zero promises will fail to achieve their goals unless they double the rate of cuts, according to a report published today by consultancy Accenture.

Only 8 per cent of companies are on track to achieve their net zero targets for scope 1 and 2 emissions by 2050, the report shows. Even if companies double their rate of progress towards emissions targets, 59 per cent will fail to meet a 2050 deadline.

Unsurprisingly, Europe leads the way among companies with net zero targets. Half of all European companies have established targets, with Norway and UK companies leading the pack. Only a third of companies worldwide have made pledges, and in North America the figure looks even more bleak at just 28 per cent.

People are getting more sophisticated in identifying companies’ climate risks, said Peter Lacy, Accenture’s global head of sustainability services. And scrutiny of companies’ strategies, their governance and ultimately their capabilities on cutting carbon “will only continue to grow”, he said.

Another report from MSCI heaped further gloom on net zero pledges. In an analysis published earlier this week, MSCI said companies have about four years left in their carbon budgets to keep global warming to 1.5C this century. Instead, companies are on track to cause global temperatures to rise 2.9C. Essentially, companies have to set and implement carbon-cutting plans five years at a time, MSCI said. Goals for 2050 are meaningless if companies cannot get emissions down now.

Ten companies are responsible for 5.5 per cent of all corporate scope 1 emissions: Saudi Aramco, Coal India and ExxonMobil are the top three emitters, MSCI said.

Conversely, Norway’s Equinor, Apple and Holcim of Switzerland are among the big companies that have published the most thorough corporate decarbonisation targets, MSCI said.

“Greenhouse gas emissions must peak by 2025 if we are to minimise catastrophic warming,” MSCI said. “The costs of inaction dwarf the costs of lowering emissions now.” (Patrick Temple-West)

Supply chains reveal a dirtier picture of Big Tech

Tech giants, such as Apple and Google, have been leaders in corporate climate action, transitioning their offices and data centres to 100 per cent renewable energy in recent years.

Yet, if we shift our focus to scope 3 — the emissions from their supply chains — a different picture emerges.

Consumer electronic brand suppliers that manufacture components of cell phones and computers in Asia primarily use electricity generated from coal and other fossil fuels, according to a report recently published by Greenpeace East Asia and environmental advocacy group,

The report investigated decarbonisation efforts by 10 big consumer electronics brands, including Apple, Google and Microsoft, and their 14 largest suppliers. On average, 77 per cent of technology manufacturing emissions were generated from the supply chain.

Top suppliers such as Hon Hai, Foxconn’s Taiwan-listed entity, and Korea’s Samsung Electronics both received a D+ grade from Greenpeace East Asia and Their big clients, on the other hand, received grades in the A range: both Apple and Google obtained an A+ while Microsoft got an A-.

The US tech companies’ grades, however, declined significantly once supply chain emissions were considered: Apple scored highest with a B, while Google and Microsoft were rated C-.

Tech giants’ supply chains are “extremely polluting”, Xueying Wu, Beijing-based campaigner for Greenpeace East Asia, told Moral Money.

Among 14 suppliers analysed, only four achieved a renewable energy usage rate above 10 per cent. The median renewable usage rate was only 5 per cent.

It is especially “alarming”, Wu said, that emissions from key semiconductor manufacturers, such as TSMC and SK Hynix, have seen double-digit increases since 2019. Meanwhile, renewable energy usage rates in 2021 stood at just 9 per cent and 4 per cent respectively.

Out of 10 big tech companies analysed in the report, only Apple has issued a 100 per cent renewable energy target for its supply chain. The iPhone maker announced last week it would pressure its suppliers to become carbon neutral by 2030 and track yearly progress.

Tech giants should provide more support for their suppliers to transition to renewable energy, Wu argued, while she believed a lack of pressure from other stakeholders including investors was “the biggest barrier for electronics suppliers in East Asia to increase their renewable energy procurement”.

But some environmental-minded investors have started to take action.

Jens Munch Holst, chief executive at AkademikerPension, said the Danish pension fund has been engaging with tech giants to demand emission reduction in their supply chains.

“The consumer electronics brands will need to help deliver decarbonisation of their supply chains and they need to do it fast to meet the goals of the Paris Agreement,” he told Moral Money, adding that “renewable energy usage in the supply chain will be key to achieving this”. (Tamami Shimizuishi, Nikkei)

Smart read

At last year’s COP26 climate summit, one of the biggest stories was an $8.5bn international support package to help South Africa move away from coal. A year on, things are not going smoothly. Don’t miss this deeply reported read from the FT’s Africa editor David Pilling, featuring interviews with some key figures in South Africa’s energy transition and a visit to the coal heartland of Mpumalanga province.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

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