A recent study by the Smith School of Enterprise and the Environment at the University of Oxford reveals that existing climate standards are inadequate in promoting the significant innovations required to achieve net zero. The study suggests that these standards should be broadened to account for a company’s overall impact on climate initiatives. This peer-reviewed research, featured in Carbon Management, comes in the wake of intense public discussions regarding climate standards and presents potential solutions for enhancing the effectiveness and credibility of corporate climate efforts.
Encouraging climate action and innovation in businesses is crucial, according to co-author Dr. Matilda Becker: “Among the largest 2000 companies, nearly half lack a net zero target, while others are making strides without any incentives. It is essential to motivate companies to extend their efforts beyond their immediate operations.”
The authors outline strategies that companies can adopt to speed up the global move towards net zero in three key areas: product power, purchasing influence, and political engagement. They recommend an additional reporting framework to assess company impacts in these spheres. Such a framework could showcase a company’s extensive role in promoting global net zero, including activities like advocating for cleaner energy initiatives or demonstrating financial backing for innovative net zero technologies.
Up to now, corporate climate standards have primarily concentrated on guiding companies in setting goals (for instance, through the Science Based Targets initiative) and tracking emissions linked to their activities (using tools like the Greenhouse Gas Protocol). While these guidelines have been crucial for cutting emissions from individual firms, the authors argue that they do not promote wider climate actions and might even hinder them.
“It’s critical for companies to track and minimize emissions across their entire value chain,” states co-author Claire Wigg, who leads Climate Performance Practice at the Exponential Roadmap Initiative. “However, it’s equally important for them to inspire – and receive acknowledgment for inspiring – systemic changes through the products they create, the suppliers they choose, and the policies they advocate for.”
“As the standards are currently structured, a rapidly growing renewable energy firm could be penalized due to the emissions produced during the manufacturing of turbines and solar panels, even though these products contribute to global emission reductions,” explains lead author Kaya Axelsson, a Research Fellow and Head of Policy and Partnerships at the Smith School. “We need a system that recognizes and rewards companies making a positive impact on the world, not just those focused on their internal operations.”
