The research conducted by the Smith School of Enterprise and the Environment at the University of Oxford highlights the limitations of current climate standards in incentivizing the necessary big-picture innovations needed to achieve net zero emissions. The peer-reviewed paper, published in Carbon Management, emphasizes the importance of expanding these standards to encompass a company’s broader influence on climate action. The study comes in the midst of a heated public debate about climate standards and offers potential solutions for enhancing both the integrity and impact of corporate climate action.
Dr. Matilda Becker, co-author of the paper, stresses the critical role of incentivizing climate action and innovation within the corporate sector. She points out that nearly half of the 2000 largest companies in the world have yet to set a net zero target, while some companies are already taking significant steps forward without receiving any rewards. Becker argues that it is imperative to encourage companies to go beyond their boundaries and enhance their efforts towards achieving carbon neutrality.
The authors of the paper propose three key areas where companies can accelerate the global transition to net zero: product power, purchasing power, and political power. They suggest the introduction of an additional reporting track to capture a company’s impact in these spheres, showcasing their broader contribution to global net zero efforts. Examples of such contributions could include advocating for cleaner energy systems and providing financial support for new net zero technologies.
While current corporate climate standards have been effective in guiding companies to set emissions reduction targets and track their own emissions, the authors argue that these standards fall short in encouraging broader climate action and may even discourage it. Claire Wigg, co-author and Head of Climate Performance Practice at the Exponential Roadmap Initiative, emphasizes the importance of companies reporting and reducing emissions across their entire value chains. She also stresses the need for companies to drive systemic change through their products, purchases, and policy advocacy, and to be rewarded for these efforts.
Lead author Kaya Axelsson highlights the limitations of current standards by pointing out that a renewable energy company with high growth potential may be penalized for emissions generated during the production of turbines and solar panels, despite the fact that these products contribute to reducing global emissions. Axelsson emphasizes the need for a more comprehensive approach that rewards companies for their transformative impact on the world, rather than just their operational emissions. The authors call for a paradigm shift in how climate standards are designed and implemented to better reflect companies’ efforts in driving positive climate action.
In conclusion, the research from the Smith School of Enterprise and the Environment at the University of Oxford underscores the urgent need to revamp current climate standards to incentivize and reward companies for their broader influence on climate action. By expanding the scope of standards to include a company’s impact on product development, purchasing decisions, and policy advocacy, companies can play a more proactive role in accelerating the global transition to net zero emissions. The authors stress the importance of recognizing and rewarding companies that are driving systemic change, rather than penalizing them for operational emissions, in order to effectively combat climate change and achieve a sustainable future.