Science Based Targets initiative – A potential greenwashing tool or a possible solution against climate change? Empirical evidence on European companies
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Journal Title
Journal ISSN
Volume Title
School of Business |
Master's thesis
Author
Date
2022
Department
Major/Subject
Mcode
Degree programme
Accounting
Language
en
Pages
61+8
Series
Abstract
Climate change is arguably one of the biggest challenges that mankind has ever faced. Science Based Targets initiative (SBTi) aims to fight against climate change by verifying scientifically approved emission reduction targets for companies. Since its foundation in 2015 the number of companies adopting science-based targets has risen sharply, but the environmental performance of those companies has remained understudied. This thesis analyses the emission reduction results of European companies in the initiative compared to the targets set by the initiative itself as well as to the European average emission reduction rate. In addition, this thesis investigates if there is a connection between the reporting quality and environmental performance among the companies in the initiative. The empirical part of the study focuses on European companies and presents evidence that companies with science-based targets perform better compared to an average company in the region. The thesis presents evidence that this difference is even statistically significant. Against the targets set by the initiative the results show that the 4,2% annual emission reduction target is a bit too ambitious, but overall, the results are in line with the 2,5% annual emission reduction target. The targets set by the initiative are important benchmarks because they need to be achieved to get global warming under control. The results of the analysis between reporting quality and environmental performance show that there is no relationship between the two. The analysis of the emission reports shows that companies need not only to improve their environmental reporting but also to standardize the way of reporting them. The results are further support to previous studies that only hard and challenging targets lead to good results. However, they also underline that there are challenges to overcome in the future. The study shows that scope 3 emissions have decreased significantly less compared to scopes 1 & 2,indicating that companies find it hard to reduce these indirect emissions.Description
Thesis advisor
Myllymäki, Emma-RiikkaKeywords
Science Based Targets initiative, emission reductions, reporting quality, climate change