Innovating Beyond Emissions for Effective Corporate Climate Goals

hand holding sign no business on a dead planet

by | Apr 30, 2024

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Voluntary corporate emissions targets have become a staple in the business world’s response to climate change, mirroring national commitments to reduce greenhouse gas emissions. However, a recent perspective paper published in Science by an international research team led by Utrecht University, including experts from Imperial College London, questions the sufficiency of these targets in driving genuine environmental change and supporting emerging green technologies.

Current Emissions-Only Targets a Barrier to Innovation

The study highlights a critical flaw in the current approach to corporate climate ambition, which primarily focuses on emissions reductions. Dr. Yann Robiou Du Pont of the Copernicus Institute of Sustainable Development at Utrecht University points out that this method needs to account for the unique challenges faced by emerging companies. These companies often require growth in emissions as they scale up innovative, eco-efficient technologies, such as new solar panel manufacturing methods. Under the current system, these necessary increases in emissions could unfairly penalize these innovators, leaving them at a competitive disadvantage.

The reliance on emissions reduction as the sole indicator of climate commitment is proving to be a barrier to innovation. The Science Based Targets initiative (SBTi) certifies companies as “Paris-aligned” if their emission reduction targets meet the goals of the Paris Agreement—to keep global temperature increase well below 2°C. However, this can inadvertently favor larger, more established companies that maintain a constant market share of emissions, thereby squeezing out smaller innovators who might exceed these targets during critical growth phases.

Proposing a New Framework for Climate Accountability

The authors propose a shift in focus from purely emissions reductions to include other factors like emissions intensity per unit of economic or physical output. While more complex, this approach could better align with the diverse needs and capacities of companies at different stages of growth and innovation. The paper also calls for the development of legal frameworks that prioritize transparency, encourage best practices, and account for companies’ contributions to the green transition.

Professor Joeri Rogelj of Imperial College London warns that the window for maintaining global warming within 1.5°C is closing rapidly, stressing the need for “concerted action” rather than reliance on voluntary targets that might lead to complacency.

Governments and intergovernmental organizations are urged to implement robust regulatory frameworks to ensure that corporate climate actions contribute effectively to global decarbonization goals. These frameworks should incentivize innovation and ensure that new technologies can compete fairly in the market. Such measures could include carbon pricing, green subsidies, and demand-side measures that evaluate products’ environmental utility.
As the debate around corporate climate responsibility evolves, this latest study clearly shows that voluntary commitments, while a step in the right direction, are insufficient on their own. Comprehensive and enforceable climate regulations are urgently needed if we are to achieve the significant decarbonization required to mitigate the most severe impacts of global warming.

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