Corporate emission targets are incompatible with global climate goals

In a Policy Forum, Yann Robiou du Pont and colleagues argue that any method to derive company-level emissions targets inherently distorts competition in favor of existing companies and penalizes emerging or growing businesses. According to du Pont et al., despite their growing importance, companies’ emissions targets are not meaningful indicators to assess the ambition of their decarbonization plans and their alignment with the Paris Agreement. To meet international climate goals, it’s well understood that the business sector must decarbonize globally. Many corporations tout that their decarbonization targets and activities are “Paris-aligned.” However, in the absence of clear scientific methods to determine how much each company should reduce its emissions to meet climate change targets, the groups that validate companies’ voluntary emissions reduction targets often use basic formulas that suggest companies adopt emissions reduction targets equal to the decarbonization rate needed globally or within their sector. They assume a company’s current emissions and the continued presence and market dominance of existing companies until their specified target date. By allocating the emissions space exclusively among existing companies, this accountability framework distorts competition and could shield well-established and high-polluting companies from market share losses to emerging or expanding competitors by penalizing innovation and the growth of more efficient companies that could have growing emissions in a decarbonizing market. Here, du Pont et al. discuss how the widespread adoption of voluntary corporate net-zero targets cannot guarantee rapid global decarbonization and should not substitute for needed regulations. The authors outline several recommendations for regulating the market and developing useful indicators for measuring compliance and success. “Governments or intergovernmental organizations should provide the legal and regulatory frameworks for companies to compete economically while contributing to sustainable innovation and emission reductions,” write the authors.