Understandably, companies are at various stages in their journey toward decarbonisation - some are leaders with ambitious targets assured or verified by third parties, whereas others are just starting out on their journey and are yet to consider a net zero target or sustainability metrics. We're also operating in an increasingly global world where we're seeing more claims of ‘green washing’ or ‘green hushing’, which makes this recently published paper more interesting.
The paper from the MIT Sloan School of Management outlines that companies who do not obtain assurance on their sustainability reports perform no better on emissions reduction than companies without the Science Based Targets initiative (SBTi) metrics. However, when assurance is obtained, the research shows that companies report a 9.5% higher carbon intensity than their peers without assurance, and importantly, a more profound impact on reducing their carbon intensity, primarily due to the initial numbers not being understated.
This highlights the importance of receiving independently assured net zero transitions and more broadly across ESG and sustainability, data which will in turn, reduce the risk of material differences in the years to come as companies close in on their net zero targets whilst building trust amongst stakeholders.
Firms that obtain assurance for their carbon emissions report on average a 9.5% higher carbon intensity than their peers without assurance. When controlling for assurance, we do not find evidence that SBTi target-setters reduce their future emissions. Instead, firms that audit reduce their future carbon intensity by 3.3%.
unknownx500
