Nearly 40% of Companies Missed 2020 Climate Targets With No Consequences

When a company misses an earnings target, it usually faces some backlash: a drop in stock prices, negative headlines, and sometimes even CEO turnover.

But when it misses a self-imposed climate goal, most often the response is…crickets.

A new study co-authored by Haas School of Business professor Shawn Kim and featured on the cover of the March issue of Nature Climate Change found that almost 40% of the companies that set 2020 emissions targets either missed the mark or simply stopped reporting on them before the deadline. The researchers found an accountability gap: these companies faced no significant market penalties or stakeholder consequences.

“This does seem like an opportunity for a free lunch,” said Kim, an assistant professor of accounting. “Companies can enjoy some immediate benefits, such as positive media sentiment and environmental scores by announcing emissions targets, but it doesn’t seem like they’re paying any consequences when they miss or drop these targets.”

The study, coauthored by Xiaoyan Jiang of New York University’s Stern School of Business and Shirley Lu of Harvard Business School, looked at over 1,000 companies that set goals to reduce greenhouse gas emissions ending in 2020. These companies represent about 5% of annual global emissions.

• Almost 61% achieved their targets
• About 9% failed
• Almost 31% disappeared, or quietly stopped reporting.

The highest success rates were for companies based in developed economies with greater press freedom, the researchers found.

“We looked at 2020 because a lot of companies set targets due at the end of every decade, so 2020 was the first year we got to observe the final outcome in a large sample,” Kim said. “It was a little surprising for us to see that so many companies didn’t transparently disclose their outcomes.”

Among the 88 companies that failed to reach their targets:

• Only a third acknowledged their failure in sustainability reports.
• Only three of them received media coverage.
• There was no significant stock movement, decline in environmental scores, decline in media sentiment, or increase in shareholder engagement when they missed the mark.

The researchers divided the 320 firms that stopped reporting on their targets into two groups: leaders and laggards. The laggards silently removed their targets, presumably after realizing they would fail, while the leaders updated their 2020 targets with more ambitious goals for 2030 and beyond.

Among the disappeared firms with absolute targets, the researchers calculated that about 63% would not have achieved their goals had they continued reporting. The materials and energy sectors had the lowest achievement rates, while healthcare and finance—less carbon-intensive industries—performed better.

Accountability gap

The findings, Kim says, point to the need for greater institutional support for reporting, auditing, and monitoring emissions targets, in the same way that earnings targets are monitored. After all, the goals did lead to significant reductions—critical progress in the battle against rising temperatures that must continue. “The problem is that the carbon disclosure framework is still in development,” Kim says. “There’s no strong verification or auditing to this information.”

Without accountability, “firms have the opportunity to engage in greenwashing because they know that they could get a benefit by announcing targets and they don’t have to pay any costs when they miss them.” Without increased oversight, this raises concerns for the credibility of 2030 and 2050 targets.

While the recent backlash against ESG standards may affect some companies’ willingness to set emissions targets, Kim expressed optimism that global pressure to try to keep warming under 2 degrees Celsius will continue. “We need accountability if we want these corporate voluntary emission reduction targets to be an effective tool in limiting global warming.”

Read the full paper:

Limited accountability and awareness of corporate emissions target outcomes By Xiaoyan Jiang, Shawn Kim, and Shirley Lu Nature Climate Change, March 2025