Big Tech’s green pledges threatened by carbon-accounting overhaul – Financial Times

Report on Proposed Revisions to Carbon Accounting and Implications for Sustainable Development Goals

1.0 Introduction

A significant revision to global carbon accounting standards has been proposed by the Greenhouse Gas Protocol, the world’s leading authority on the matter. This update, the first in a decade concerning power-sector emissions, is poised to create more stringent disclosure rules for large energy consumers. The proposed changes have profound implications for corporate climate strategies and directly impact the achievement of several key Sustainable Development Goals (SDGs), notably SDG 7 (Affordable and Clean Energy), SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action).

2.0 Analysis of Proposed Accounting Changes

The core of the proposal is to reform how companies account for clean energy investments, moving away from a flexible system of credits to one that demands a direct and verifiable link between renewable energy generation and consumption.

2.1 Current Accounting Methodology

• Companies can claim progress towards “100 per cent” renewable energy goals by purchasing “renewable energy credits” (RECs).
• This system permits a geographical and temporal disconnect. For example, a company can offset emissions from fossil fuel-powered operations in one region and time zone by purchasing solar energy certificates generated in another.
• This practice has been criticized for allowing rising corporate pollution while enabling claims of renewable energy use, undermining genuine climate action as outlined in SDG 13.

2.2 Proposed “Credible Link” Methodology

• The new guidelines would require that renewable energy is produced at approximately the same time and within the same electricity market as it is consumed.
• This “24/7” hourly-matching and localized approach aims to ensure that corporate investments directly contribute to decarbonizing the specific grids they operate on, a crucial step for advancing SDG 7.
• The objective is to make reported greenhouse gas emissions data more “accurate, comparable and decision-useful,” directly supporting the principles of corporate accountability in SDG 12.

3.0 Impact on Sustainable Development Goals

The proposed revisions are set to fundamentally realign corporate climate pledges with the tangible objectives of the SDGs.

3.1 SDG 7: Affordable and Clean Energy

The proposal directly addresses Target 7.2, which aims to increase the share of renewable energy in the global energy mix. By mandating a temporal and geographical link, the new rules ensure that corporate demand for clean energy drives new renewable capacity in the locations where energy is consumed, accelerating a real-world transition away from fossil fuels.

3.2 SDG 12: Responsible Consumption and Production

This initiative strongly supports Target 12.6, which encourages companies to adopt sustainable practices and integrate sustainability information into their reporting cycles. The move away from what critics call “environmental accounting gimmicks” towards a more transparent and accurate system enhances corporate responsibility and prevents greenwashing.

3.3 SDG 13: Climate Action

The reform is a critical measure for strengthening global climate action under SDG 13. It ensures that corporate climate targets, which are integral to national and international climate strategies (Target 13.2), are underpinned by verifiable and impactful actions rather than purely financial offsetting mechanisms.

4.0 Stakeholder Positions and Industry Implications

The proposal has generated diverse reactions from major corporations and industry groups, highlighting different approaches to achieving global climate and development goals.

1. Proponents of Stricter Rules: A small number of companies, including Google and AstraZeneca, have already endorsed the more rigorous “24/7” localized approach, demonstrating leadership in aligning corporate strategy with robust climate action.
2. Advocates for Flexibility: A coalition including Meta, Amazon, and General Motors has argued for a more flexible system. They contend this could better channel investment into developing countries, framing their position as an alternative pathway to achieving global goals, which relates to the multi-stakeholder partnerships of SDG 17.
3. Government and Regulatory Scrutiny: US attorneys-general have accused major tech companies of using deceptive accounting, indicating growing regulatory pressure for greater transparency and accountability in corporate climate claims.

The changes are expected to make it “fundamentally more expensive” for companies to meet 100% renewable targets, as the cost of certificates for off-peak hours will likely rise. This financial pressure may spur innovation in energy storage and grid management, contributing to the development of sustainable infrastructure as envisioned in SDG 9.

5.0 Conclusion

The proposed update by the Greenhouse Gas Protocol marks a pivotal moment in corporate climate accountability. By demanding a more scientifically rigorous and transparent method for accounting for electricity emissions, the new rules aim to close loopholes that have weakened the impact of corporate renewable energy commitments. This reform is essential for ensuring that corporate actions genuinely contribute to the ambitious targets of the Sustainable Development Goals, particularly in advancing clean energy (SDG 7), promoting responsible production (SDG 12), and taking urgent action to combat climate change (SDG 13).

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 7: Affordable and Clean Energy
   • The article extensively discusses corporate efforts to achieve “100 per cent” renewable energy goals through investments in wind, solar, and hydro power. It also examines the mechanisms, such as “renewable energy credits,” used to account for clean energy consumption, which is central to ensuring access to affordable, reliable, sustainable, and modern energy.
2. SDG 9: Industry, Innovation, and Infrastructure
   • The article highlights the significant energy consumption of industries, particularly the tech sector’s AI data centers. The proposed changes to carbon accounting rules directly impact how industrial groups and infrastructure-heavy companies like Amazon and Meta must innovate and adapt their practices to be more sustainable and accurately report their environmental impact.
3. SDG 12: Responsible Consumption and Production
   • This is a core theme of the article. The focus on the Greenhouse Gas Protocol’s stricter disclosure rules for carbon footprints directly addresses the need for companies to adopt sustainable practices and integrate sustainability information into their reporting. The debate over “environmental accounting gimmicks” versus credible reporting is central to ensuring sustainable consumption and production patterns.
4. SDG 13: Climate Action
   • The entire article is framed around climate action. It deals with the measurement and disclosure of greenhouse gas emissions, the effectiveness of corporate climate targets, and the need for robust carbon accounting to underpin climate goals. The proposed rules aim to make corporate climate action more transparent and impactful.
5. SDG 17: Partnerships for the Goals
   • The article showcases various partnerships. The Greenhouse Gas Protocol is a multi-stakeholder oversight body. The text mentions coalitions of companies (Meta, Amazon, General Motors) lobbying for certain standards, as well as collaborations between financial backers (Amazon, Meta, Microsoft) and the Protocol itself. This illustrates the complex interplay between public, private, and civil society partnerships in setting global standards.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
   • The article directly relates to this target by discussing how large corporations like Amazon and Meta are trying to meet “100 per cent renewable energy goals” by investing in “wind, solar and hydro power.” The debate over how to account for these investments (e.g., through renewable energy credits) is about ensuring that these efforts genuinely contribute to increasing the share of renewable energy.
2. Target 12.6: Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.
   • This target is the central focus of the article. The Greenhouse Gas Protocol’s proposal for “stricter disclosure rules” is a direct mechanism to encourage large companies to adopt more sustainable practices. The article states that these rules dictate “how companies should disclose their carbon footprints,” which is a key part of integrating sustainability information into reporting.
3. Target 13.2: Integrate climate change measures into national policies, strategies and planning.
   • The article shows how corporate standards influence broader policy. It notes that “The EU, California and the International Financial Reporting Standards all draw on the voluntary Greenhouse Gas Protocol oversight body in their guidelines.” This demonstrates how a non-governmental standard for corporate action is integrated into governmental and international regulatory frameworks for climate change.
4. Target 17.17: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.
   • The article describes the Greenhouse Gas Protocol as a central oversight body whose financial backers include major tech companies like “Amazon, Meta, Salesforce, Microsoft and Google.” It also mentions a “coalition that includes Meta, Amazon and General Motors” arguing for specific rules. This illustrates a complex public-private partnership dynamic aimed at setting global standards for carbon accounting.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicator for Target 7.2: Renewable energy share in total final energy consumption.
   • The article implies this indicator through the corporate goal of “100 per cent renewable energy.” The effectiveness of this is measured by the use of “renewable energy credits” and the proposed new “24/7 hourly-matching and localised approach,” which provides a more granular way to measure if a company’s energy consumption is truly matched by renewable generation in the same market and at the same time.
2. Indicator for Target 12.6: Number of companies publishing sustainability reports.
   • While the article doesn’t give a number, it focuses on the quality and methodology of these reports. The key indicator discussed is the standard used for reporting, specifically the “Greenhouse Gas Protocol” guidelines. The proposed update to how companies “disclose their carbon footprints” and measure “power-sector emissions” serves as a qualitative indicator of progress toward more meaningful and accurate sustainability reporting.
3. Indicator for Target 13.2: The number of countries that have communicated the establishment or operationalization of an integrated policy/strategy/plan which increases their ability to adapt to the adverse impacts of climate change.
   • The article implies a corporate-level version of this. The adoption of the Greenhouse Gas Protocol’s standards by regulatory bodies like the “EU” and “California” is an indicator of how climate change measures are being integrated into policy. The stringency of these adopted standards (e.g., the proposed update) can measure the depth of this integration.

4. Summary Table of SDGs, Targets, and Indicators

Source: ft.com