A recent study from the Smith School of Enterprise and the Environment at the University of Oxford has determined that existing climate standards are inadequate for motivating the large-scale innovations needed to achieve net zero goals. The research suggests that these standards should be broadened to encompass a company’s wider effect on climate initiatives. This peer-reviewed study, published in Carbon Management, emerges amid intense public discussions surrounding climate regulations and proposes potential strategies to enhance the integrity and effectiveness of corporate climate efforts.
Dr. Matilda Becker, a co-author of the study, emphasizes the importance of promoting climate action and innovation within corporations: “Nearly half of the world’s 2000 largest companies still lack a net zero target, while others make significant advances without any compensation. We must encourage businesses to work beyond their own limits.”
The authors suggest that companies can expedite the global shift toward net zero emissions by leveraging their influence in three key areas: product innovation, purchasing decisions, and political engagement. They recommend implementing an additional reporting framework to highlight a company’s contributions in these domains, which may include advocating for cleaner energy systems or financially backing new net zero technologies.
So far, corporate climate standards have primarily focused on helping firms establish targets (e.g., through the Science Based Targets initiative) and monitor their own emissions (e.g., using the Greenhouse Gas Protocol). Although these standards have been crucial in lowering emissions from individual companies, the authors argue that they do not incentivize more extensive climate efforts and may even hinder them.
Claire Wigg, a co-author and Head of Climate Performance Practice at the Exponential Roadmap Initiative, notes, “It’s crucial for companies to document and cut down emissions throughout their value chains. However, they must also be encouraged—and adequately rewarded—for fostering systemic changes through the products they create, the purchases they commit to, and the policies they support or oppose.”
Lead author Kaya Axelsson, a Research Fellow and Head of Policy and Partnerships at the Smith School, adds, “The current standards can be misleading; for instance, a high-growth renewable energy company might receive poor evaluations due to the emissions from turbine and solar panel production, even though these products contribute to global emission reductions. We need a system that fairly compares and incentivizes companies for their transformative impact on the world, beyond just their operational activities.”