Evaluating net-zero targets<i>’</i> impact on corporate GHG emissions

Abstract This paper investigates the effects that science-based targets (SBTs) have on corporate greenhouse gas (GHG) emissions. Using a difference-in-differences methodology, we assess whether companies that commit to a net zero goal show a decrease in GHG emissions compared to similar companies that declare such goals later. Our results provide limited evidence that organizations with SBT reduce emissions, particularly for Scope 1 and Scope 2 emissions, as the findings lack strong statistical significance. We also examine whether the pace of emission reductions increases as companies approach their target year. Our results indicate that efforts to reduce emissions increase before the announcement, but may stabilize thereafter. These results highlight the challenges of accurately assessing the tangible impact of voluntary corporate commitments on climate goals and underscore the need for comprehensive and clear reporting to prevent misleading claims and promote confidence in climate finance.