Accountability of Corporate Emissions Reduction Targets

Firms are increasingly announcing targets to reduce their carbon emissions, but it is unclear whether firms are held accountable for these targets. In this paper, we examine emissions targets that ended in 2020 to investigate the prevalence of missed targets, how firms disclose target results, and whether there are consequences for missed emissions targets. Using data from the CDP, 1,041 firms have emissions targets ending in 2020, of which 88 (8%) failed and 320 (31%) disappeared. We find limited evidence of accountability and low awareness of the target outcomes. Only three of the failed firms are covered by the media. After a firm fails its 2020 emissions target, we do not observe significant market reaction, changes in media sentiment, environmental ratings, and environment-related shareholder proposals. In contrast, we observe significantly positive reactions in media sentiment and environmental scores when firms initially report setting their 2020 emissions targets. Our findings underscore the importance of institutions increasing transparency and holding firms accountable for emissions target outcomes, providing insights for emissions targets ending in 2030, 2040, and 2050.