Behind schedule: The corporate effort to fulfill climate obligations

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides a conceptual and empirical framework for evaluating the credibility of corporate climate commitments and market reactions to target revisions.

🏢実務担当者:Highlights the importance of setting interim milestones and communicating progress transparently to maintain stakeholder trust and avoid greenwashing accusations.

🏛政策担当者:Suggests that voluntary commitments alone may be insufficient, arguing for stronger accountability mechanisms and potential penalties for missed targets.

The 2015 Paris Agreement represented the first multilateral agreement to acknowledge and support efforts by so-called non-state actors, including corporations, to cut their greenhouse gas emissions. Moreover, the goals and structure of the Paris Agreement—focused on limiting warming to well below 2°C relative to pre-industrial levels and allowing for national governments to set voluntary emission goals—have informed the setting and adoption of voluntary corporate commitments. Some corporations have taken on “Paris-aligned” emission commitments, indicating that they would deliver emission reductions consistent with the temperature objective of the 2015 agreement. With the increasing adoption of mid-century net-zero emission goals by national governments, some corporates have likewise adopted their own net-zero emission commitments. Before the Paris Agreement few companies had made commitments to reduce their carbon emissions. Most of them did so through the Carbon Disclosure Project (CDP), which benefited from the momentum generated by the Paris agreement to substantially expand the number of companies that would make decarbonization pledges and voluntarily disclose their carbon emissions. Later, CDP along with the United Nations Global Compact, the World Resources Institute (WRI), and the Worldwide Fund for Nature, founded the Science-Based Target initiative (SBTi) to engage with companies to implement carbon reduction commitments that are aligned with the Paris agreement and the goal of limiting global overheating to less than 2°C above pre-industrial levels. As Mark Carney had predicted in the run-up to the COP 26 in 2021, “More and more companies—and it will be a tsunami by Glasgow—will have net zero emissions plans.”1 As of this writing, SBTi can boast that “more than 4,000 businesses around the world are already working with the Science-Based Targets initiative.”2 Other major decarbonization drives in the wake of the Paris agreement have emerged in the financial sector, with the launch of the Task Force on Climate-Related Financial Disclosures in 2015, Climate Action 100+ in 2017, the inauguration of the Asset Owners Net-Zero Alliance in 2019 together with the Net Zero Asset Managers Initiative in 2020, and, the culmination of this wave of initiatives, the creation of the Glasgow Financial Alliance for Net Zero by Mark Carney at the COP 26 in April 2021. In parallel, the Network for Greening the Financial System (now comprising 121 central banks and financial supervisory authorities) was set up in 2017, providing guidance on net zero compatible decarbonization pathways. In short, the Paris agreement has ushered in a new era of decarbonization commitments. An important aspect of emission reduction commitments is the extent to which they specify interim targets. Commitments are less credible when they specify distant targets and are vague about the pathway toward attaining the target. Businesses cannot decarbonize overnight. Eliminating GHG emissions is inevitably a gradual process, which involves replacing old operating facilities as they depreciate with new facilities powered by renewable energy. The cost of decarbonization can be reduced if this replacement of old with new plants and equipment is spread out over time—hence the net zero targets that are decades away. There is considerable uncertainty over such a long period, which could produce new technological breakthroughs, new green regulations, or new pandemics and wars that disrupt energy supplies. Thus, companies need flexibility and cannot tie themselves to a pathway that is too rigid. On the other hand, the risk of missing the ultimate target is greater if companies do not specify interim milestones. Many companies that do make commitments to decarbonize do specify such milestones. For these companies we can determine whether they are on track or are falling behind. We also explore how the market reacts when a company falls behind or abandons its commitments mid-course. When we do so, we find little evidence of a backlash. A case in point is the February 2023 announcement by BP that it would delay its near-term commitment to reduce oil and gas production, changing its 2030 target from a 40% to just a 25% reduction. Despite considerable criticism, BP has so far suffered no negative effects from this move. On the contrary, its stock price increased significantly following its announcement of the change in plans (though likely attributable to concurrently announced soaring oil profits). To illustrate the implications of the Paris approach through voluntary corporate actions, we frame our analysis through three conceptual interrogations. First, in section “Incentives for Corporations to Adopt Voluntary Commitments” we examine what induces companies to make decarbonization pledges on a voluntary basis. We also study how corporate pledges take account of uncertainty and changing circumstances. In section “What are corporations pledging to do, and how are they”, we show how companies have managed to fulfill their pledges so far, and the extent to which their decarbonization trajectories are consistent with their ultimate targets. In section “The broader commitments landscape: countries, universities”, we look beyond corporate commitments and study the role of commitments by countries, universities, and asset managers. In section “How to handle failing commitments?”, we discuss various ways in which companies and regulators could adjust to the possibility of failing commitments. The conventional wisdom about corporations and the environment has long reflected two major themes: (1) Milton Friedman's 1970 proclamation that the “the social responsibility of business is to increase profits”; and (2) the imposition by environmental regulations of significant costs on business.3 In recent years, however, corporations have pursued various forms of self-regulation, including the adoption of voluntary greenhouse gas emission commitments. In contrast to the conventional wisdom, corporate management may have a more nuanced take on the incentives and rationale for committing to emission-reduction goals. With growing attention to addressing the risks posed by a changing climate among consumers, investors, workers, and other stakeholders, corporate managements may find it in their interest to cut their greenhouse gas emissions. With a growing interest among consumers in the environmental characteristics of the goods and services they purchase, a corporation may find that “signaling” its efforts to address climate change may facilitate product differentiation and increase market share and/or mark-ups. Especially in retail-facing environments, corporates have found value in enhancing their brand and image through public efforts to demonstrate their social responsibility.4 The challenge with such a strategy of drawing attention to emission-cutting efforts lies in the prospect that some stakeholders, both those in the investment community and civil society, may accuse the corporate of greenwashing—that is, misleading the public about the environmental impact of the corporation. Corporations operate under a patchwork of energy, climate, and tax policies that may influence the adoption of an emission commitment. In some contexts, a corporation may already face significant regulatory requirements, such as those operating under the EU Emission Trading System or in California, associated with its own cap-and-trade program, as well as renewable and low-carbon requirements in its power and petroleum refining sectors. The incremental effort—and hence opportunity cost of investment—would be lower for such corporations covered by regulations to attain any given emission goal than for other corporations operating beyond the scope of regulatory mandates. To the extent that regulations have targeted relatively more expensive ways for a corporate to reduce may be emission reductions that could the corporate to emission targets that are more than its regulatory Moreover, the and from investment to with regulatory may facilitate to cut emissions by the uncertainty associated with such In a corporations operating in with for in energy as tax for for in emission and for the energy of its find the incremental costs of emissions to be and, the cost the may be with public For the of an of energy investment tax the and of investment In to for emissions the corporate some companies have on the for emission beyond the corporate as a to reduce their costs of a The and of two of for corporate they to and the they and also the over the adoption of an emission target. with green as well as those on to as asset may have a interest in that the corporates they in have credible for decarbonization With growing and the of to green in management corporate may voluntary emission targets as a to address and such Moreover, with growing interest in climate change among may find that a climate change as a of a broader corporate social responsibility facilitate the and of new in the a corporate may voluntary emission targets and an associated emission-reduction to influence and In some and credible corporate emission could In other such efforts could the of and a corporate with greater in the which may it to value or costs on from A corporate may also to regulators a for through its own goals and its of an carbon how corporates in with carbon are more likely to an carbon price in their and strategy and that such carbon are in those with carbon under the climate these are for a corporate a voluntary emission analysis can our of whether so the value to the In an by of in this in we the from we to the of commitments on on that the carbon emissions and carbon analysis that in a CDP initiative can on of the carbon the of that this is not for SBTi for pledges and have no impact on also with the Financial companies pledges a attributable to costs associated with the to net-zero emissions. In are two effects that the

• openalex https://doi.org/10.1111/jacf.12560first seen 2026-08-02 17:54:25