An international group of researchers and practitioners convened at Harvard University in October 2024 to delve into the effectiveness of corporate net-zero targets and other voluntary targets in reducing carbon emissions. The participants discussed the economic, financial, and legal dimensions of corporate decarbonization efforts and emerging trends.

Professor Joe Aldy of Harvard Kennedy School and Professor Mike Toffel of Harvard Business School, together with Zhanbing Xiao, a postdoctoral fellow, led the convening. All three are members of the Corporate Net-Zero Targets Project, a climate research cluster funded by the Salata Institute for Climate and Sustainability.

Large, publicly-traded companies in the United States are increasingly adopting voluntary greenhouse gas reduction goals. Some of these companies are using net-zero or “Paris-aligned” emission goals under the Science-based Targets Initiative. Regardless of the type of target, companies are deploying various approaches to reduce their emissions, from investing in new equipment, to divesting from energy-intensive assets, to procuring renewable power, to buying carbon credits to offset their emissions. These efforts occur against a shifting and fragmented policy landscape of emission standards, carbon pricing, clean energy subsidies, and disclosure regulations.
  

The workshop sought to explore questions such as:  

• Why are firms adopting such voluntary targets?  
• What are the implications of voluntary targets for corporate strategy, investment, and action?  
• Are those announcing these targets actually reducing their emissions faster than those who haven’t?  
• How does the policy and legal environment influence the adoption and implementation of voluntary targets?  
• How do the public and interested stakeholders learn about a company’s progress toward reaching its targets?  

To help answer these questions, the Corporate Net-Zero Targets Project is developing a database of voluntary corporate emission targets among Russell 3000 companies, drawing from companies’ published reports and disclosures made over the past twenty years. The team presented initial insights based on analysis of this database. Practitioners from non-governmental organizations and several companies engaged with this scholarship, providing feedback, and reflecting on their work to reach their climate targets. The workshop participants also discussed the impact of the evolving regulatory landscape in the United States, Europe, and elsewhere. 

“The exchange of ideas and questions among the practitioners and scholars will help frame research on voluntary corporate emission reduction goals and ensure that future scholarship will advance our understanding of and identify opportunities for cutting emissions through corporate actions,” said Professor Aldy.

Professor Toffel noted the benefits of creating this community, “The workshop allowed us to learn from each other’s experience and insights, improve our work, and develop new projects and collaborations. Having a few NGOs and companies in the room allows scholars to learn from their on-the-ground experiences, enabling us to ensure our research is aimed at some of the biggest challenges that companies, NGOs, and policymakers are facing.”

The Corporate Net-Zero Targets Project will continue to analyze climate targets and to engage stakeholders in understanding their impact. The Project also plans to make its database of Russell 3000 companies’ commitments publicly available.

 Academic papers presented at the workshop include: 

• Strategic Commitments to Decarbonize: The Role of Large Firms, Common Ownership, and Governments, Viral V. Acharya, NYU Stern School of Business
• The Alignment of Companies’ Sustainability Behavior and Emissions with Global Climate Targets, Maurizio Zollo, Imperial College Business School & Simone Cenci, UCL Institute for Sustainable Resources
• Are Carbon Emissions Associated with Stock Returns? Jitendra Aswani, National University of Singapore (NUS) Business School
• The Impact of Climate Engagement: A Field Experiment, Florian Heeb, Leibniz Institute for Financial Research SAFE
• Dirty Opposition, Clean Support? A Global Corporate Climate Policy Lobbying Analysis, Benjamin Leffel, School of Public Policy and Leadership, University of Nevada Las Vegas (no link available at this time)
• Accountability of Corporate Emissions Reduction Targets, Shirley Lu, Harvard Business School                   
• Set & Done? Tradeoffs between Salience and Attainment Pressures in Corporate Carbon Target Management, Patrick J. Callery, Grossman School of Business, University of Vermont, Eun-Hee Kim, Gabelli School of Business, Fordham University
• Business as Usual: Bank Climate Commitments, Lending, and Engagement, Parinitha Sastry, Columbia Business School

Photo credit: Carissa Hanjani

Click here to learn more about the Corporate Net-Zero Targets Project.