Accountability of Corporate Emissions Reduction Targets

Companies are increasingly announcing emissions reduction targets, but it is unclear if firms are being held accountable for them. In the paper presented in this Decarbonization Seminar examines emissions targets that ended in 2020 to investigate which firms fail, how firms disclose the target outcomes, and if there are consequences to failing emissions targets. Using data from the CDP, 85 firms failed to achieve their 2020 targets, representing 13% of the completed emissions targets reported for 2020. After a firm failed its 2020 emissions target, the authors do not observe significant changes in media cover- age, market response, environmental scores, and environment-related shareholder proposals. While setting emissions targets generate high media coverage, only four of the 85 failed firms are picked up by the media, which suggests a lack of awareness of the target outcomes. They also find evidence of reputation building, where in subsequent target announcements, there is a positive market reaction to firms with achieved 2020 targets. The authors findings highlight the importance of institutions providing accountability for the progress of emissions targets, and provide insights for targets that will end in 2030, 2040, and 2050.