Accountability of Corporate Emissions Reduction Targets

75 Pages Posted: 16 Jan 2024

See all articles by Xiaoyan Jiang

Xiaoyan Jiang

Harvard University - Business School (HBS)

Shawn Kim

University of California, Berkeley - Haas School of Business

Shirley Lu

Harvard University - Business School (HBS)

Date Written: December 27, 2023

Abstract

Firms are increasingly announcing targets to reduce their carbon emissions, but it is unclear whether firms are held accountable for these targets. In this paper, we examine emissions targets that ended in 2020 to investigate the prevalence of missed targets, how firms disclose target results, and whether there are consequences for missed emissions targets. Using data from the CDP, 1,041 firms have emissions targets ending in 2020, of which 88 (8%) failed and 320 (31%) disappeared. We find limited evidence of accountability and low awareness of the target outcomes. Only three of the failed firms are covered by the media. After a firm fails its 2020 emissions target, we do not observe significant market reaction, changes in media sentiment, environmental scores, and environment-related shareholder proposals. In contrast, we observe significantly positive reactions in media sentiment and environmental scores when firms initially report setting their 2020 emissions targets. Our findings underscore the importance of institutions increasing transparency and holding firms accountable for emissions target outcomes, providing insights for emissions targets ending in 2030, 2040, and 2050.

Keywords: Emissions reduction target, decarbonization, climate change, accountability

JEL Classification: Q54, M14, M41, G14

Suggested Citation

Jiang, Xiaoyan and Kim, Shawn and Lu, Shirley, Accountability of Corporate Emissions Reduction Targets (December 27, 2023). Available at SSRN: https://ssrn.com/abstract=4676649 or http://dx.doi.org/10.2139/ssrn.4676649

Xiaoyan Jiang

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

Shawn Kim

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Shirley Lu (Contact Author)

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

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