Towards carbon neutrality through the Science-Based Targets initiative: Why and how well have Finnish companies committed to the Science-Based Targets initiatives

Abstract

The primary purpose of this thesis is to study why and how well have Finnish multinational enterprises adopted the Science-Based Targets initiative. The aim is to identify the commitment motives of Finnish companies, as well as reveal if the emission reduction targets are in line with the latest climate science and Finland's agenda of becoming the first carbon-neutral welfare society in the world.

Research in the field of corporate sustainability advocates that environmental sustainability has become one of the most crucial topics in international business during the 21st century. Multinational enterprises have started to pursue new green business models to reflect their care towards the environment. These new green business models are built around climate actions, such as emissions reductions within the global value chain of the company. Moreover, to support the increasing demand for effective climate action, corporations have started to join voluntary initiatives.

The literature review provides discussion about the themes of climate change's effect on multinational enterprises, corporate environmental sustainability, global value chains, sustainability reporting, and voluntary initiative agreements. The synthesis of the literature review suggests that private corporations have started to self-regulate their global value chain emission reductions. Companies have started to take part in voluntary initiative agreements to support their self-regulations activities. These sustainability activities are more actively disclosed through sustainability reporting to the company stakeholders. The theoretical framework is structured to showcase these central themes of the literature as well as address the case phenomenon to support the research question of this study. The case phenomenon is discussed through the introduction of the Science-Based Target initiative and the carbon neutrality objective of the Finnish government.

The empirical data collected through secondary sources such as sustainability reports, the Science-Based Targets initiative website, and other company publications. The empirical data covers each case company in terms of the core initiative factors. The application of the theoretical framework confirmed that both internal- and external stakeholder pressure guided the case companies to commit to the Science-Based target's initiative. The climate action was set to be in accordance with the initiative's scientifically validated objectives in terms of emission reduction within the global value chain. This whole process was communicated back to the company stakeholder mainly through sustainability reports in a transparent manner.

The results of the empirical data analysis reveal that 27 Finnish multinational enterprises have set emission reduction targets through the Science-Based target initiative. The majority of the companies reflected the scientifical aspect of the initiative as the main commitment motive. Finally, the analysis of the emission reduction commitments certifies that the preponderance of the targets are in line with both the latest climate science of the Science-Bases targets and the carbon neutrality roadmap of the Finnish government.