Moving Targets

Announcing an emissions target can make for good PR for a company. But what happens when a business misses a self-imposed climate goal? Most often, nothing.

A new study co-authored by Assistant Professor Shawn Kim and featured on the cover of Nature Climate Change found that out of 1,000 companies that set 2020 emissions targets, almost 40% either missed the mark or simply stopped reporting on them—yet none faced significant market penalties or stakeholder consequences.

“This does seem like an opportunity for a free lunch,” says Kim. “Companies can enjoy some immediate benefits, such as positive media sentiment and environmental scores by announcing emissions targets, but it doesn’t seem like they’re paying any consequences when they miss or drop these targets.”

The findings point to the need for greater institutional support for reporting, auditing, and monitoring emissions targets, in the same way that earnings targets are monitored. “The problem is that the carbon disclosure framework is still in development,” Kim says. “There’s no strong verification or auditing to this information.”