Accountability of Corporate Emissions Reduction Targets

Shirley Lu
Harvard University
May 30, 2023 – 01:45 – 03:15 PM (CEST)

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Seminar Abstract
Companies are increasingly announcing emissions reduction targets, but it is unclear if firms are being held accountable for them. In this paper, we examine emissions targets that ended in 2020 to investigate which firms fail, how firms disclose the target outcomes, and if there are consequences to failing emissions targets. Using data from the CDP, 85 firms failed to achieve their 2020 targets, representing 13% of the completed emissions targets reported for 2020. After a firm failed its 2020 emissions target, we do not observe significant changes in media cover- age, market response, environmental scores, and environment-related shareholder proposals. While setting emissions targets generate high media coverage, only four of the 85 failed firms are picked up by the media, which suggests a lack of awareness of the target outcomes. We also find evidence of reputation building, where in subsequent target announcements, there is a positive market reaction to firms with achieved 2020 targets. Our findings highlight the importance of institutions providing accountability for the progress of emissions targets, and provide insights for targets that will end in 2030, 2040, and 2050.

Speaker Bio
Shirley Lu is an assistant professor in the Accounting and Management Unit. She teaches the Financial Reporting and Control course in the MBA required curriculum.

Professor Lu conducts research in the area of Corporate Social Responsibility (CSR) disclosure, with a focus on topics related to climate change and gender diversity. Her research aims to evaluate firm’s CSR performance, understand CSR measurements and ratings, and investigate institutional frameworks that facilitate CSR disclosures. Some of her works examine the bonding mechanisms of green bonds, and the credibility of CSR disclosures and ESG scores.

Professor Lu earned a PhD in accounting and an MBA from the University of Chicago. She earned a BS in accounting and finance, and a MS in accounting, both from New York University.

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