Multinational enterprises and greenhouse gas emissions: The dual reality of climate governance mechanisms

Multinational enterprises (MNEs) have a collective carbon footprint that would rank fifth among nations, positioning them at the center of the debate on climate change mitigation. Framed through theories of temporality, stakeholder pressure, and signaling, this study examines whether and how MNEs have reduced greenhouse gas (GHG) emissions over time. Using longitudinal data over 15 years (2009–2023), we track absolute reductions in scope 1 (direct) and scope 2 (indirect) emissions across the world’s top non-financial MNEs headquartered in 30 countries. We find that 69% of firms reduced scope 1 emissions, with an even higher proportion reducing scope 2 emissions and emission intensities. Reductions accelerated after the 2015 Paris Agreement, though fewer than 45% achieved reductions consistent with international climate targets. Our results highlight the central role of sustained climate governance mechanisms including board oversight, climate strategy, emission targets, monetary incentives, and verification in driving emission reductions. These mechanisms are effective only among firms already on a path to reduce GHG emissions. In firms that increased emissions, governance mechanisms appeared largely symbolic, underscoring the risk of greenwashing in corporate climate governance.