Behind Schedule: The Corporate Effort to Fulfill Climate Obligations

Abstract

We analyze corporate commitments to reduce carbon emissions. We show that companies in their decisions to commit are more driven by external shareholder pressure and reputational concerns rather than economic motives due to cost of capital effects. We further show that many companies focus on short-term pledges many of which get revised over time. Despite the growth in commitment movement, we find that most companies have fallen behind on their commitments for reasons that could be both systematic and idiosyncratic in nature. Finally, we discuss various possibilities that would strengthen the quality of the decarbonization pledges.

Keywords: Carbon Emissions, Science Based and CDP Targets, voluntary commitments, corporate social responsibilit

JEL Classification: Q54