New Research Highlights Shortcomings in Corporate Climate Standards

According to new research from the Smith School of Enterprise and the Environment, University of Oxford, current climate standards are inadequate and fail to drive significant innovations needed to achieve net zero emissions. The study, published in Carbon Management, suggests that these standards should be broadened to account for a company's overall impact on climate action, not just its immediate actions or outputs.

"Of the 2000 largest companies, close to half still do not yet have a net zero target, while some are going further without reward. We need to incentivise companies' efforts beyond their boundaries,” said co-author Dr. Matilda Becker.

Becker and her colleagues discussed actions companies can take to speed up the necessary global transition to net zero by examining three spheres of influence defined as product power, purchasing power and political power. Additionally, the team proposed a new system of reporting to track a given company’s impact in an area. This track, according to a press release announcing the study results, “would demonstrate a company's wider contribution to global net zero, and examples could include lobbying for cleaner energy systems or signalling financial support for new net zero technologies.”

Corporate climate standards are lacking and predominantly focus on helping companies set emissions reduction targets and monitor their own greenhouse gas emissions. This includes initiatives like the Science Based Targets initiative for setting targets and the Greenhouse Gas Protocol for tracking emissions. The authors acknowledge that these standards have been useful and essential for reducing emissions produced by individual companies. However, they note that the current course of actions does not incentivize more large-scale climate action. In fact, these corporate behaviors might discourage it altogether.

According to the Carbon Majors Database, 57 specific oil, gas, coal and cement producers are responsible for 80% of the world’s fossil fuel emissions since the Paris Agreement, under which world leaders expressed their commitment to prevent global temperatures rising by more than 1.5C.

The analysis found that most major fossil fuel producers increased their production and related emissions in the seven years since the Paris Agreement—the first time the majority of the world’s nations agreed to cut greenhouse gas emissions—compared to the seven years before. Among the 122 largest historical climate polluters studied, 65% of state entities and 55% of private-sector companies increased their production during this period.