Kai Nip

Information on corporate efforts to reduce greenhouse gas emissions is now publicly available, thanks to research conducted at the Yale School of Management by professor Lesley Meng and SOM students Daniela Chona SOM ’20 and Pete Edmunds SOM ’20. 

The trio published their report, titled “Net Zero: The Next Frontier for Corporate Sustainability,” through the Yale Center for Business and the Environment in December. The research examines greenhouse gas emissions among companies in the S&P 100, looking at the companies’ initiatives to reduce emissions and reach a “net zero” goal of carbon neutrality. 

The report features nine visualizations that depict corporate emissions and sustainability goals, most strikingly revealing that over 60 percent of emissions from the S&P 100 come from just five companies: Exxon Mobil, Nextera, Duke Energy, Southern Company and Chevron. In addition, the report found that despite many firms’ announcements of reaching carbon neutrality, few have done substantive work.

“We saw some very promising leadership from firms like Microsoft and a flurry of recent announcements to achieve net zero emissions by 2050 or earlier in line with the Paris Agreement, but in general we didn’t see enough substance in these firms’ plans to meet these ambitious goals,” Edmunds wrote in an email to the News. “There’s a lot to be excited about with the corporate emissions reductions goals that have recently been announced, but a lot of work remains to achieve these goals and we don’t have much time to work with.”

He explained that many firms are over-relying on carbon offsets –– certificates representing a one metric ton reduction of carbon dioxide emissions that are used to finance emissions reduction projects –– which will not do enough to reach a “collective net zero.” Edmunds also mentioned that while many large corporations release public statements about climate initiatives, they still donate money to political candidates whose policies do not protect the planet.

The group explained that one of their motivations for this research was the lack of publicly available data on greenhouse gas emissions among top companies. According to Edmunds, one of the reasons for this is that many firms did not publish their emissions data until very recently; he pointed out that Amazon only started reporting its data in 2018. 

Additionally, he said that the United States does not have consistent, mandated reporting standards for environmental, social and governance topics among corporations. This, which is not the case in many other countries, has also contributed to the lack of emissions data. 

“The US lags far behind Europe on this issue, and the Biden administration is likely to make progress against this through the [Securities and Exchange Commission],” Edmunds wrote to the News, “so I would expect to see this change over the next four years.”

To combat the lack of publicly available aggregate data, Meng, Edmunds and Chona manually tracked down the S&P 100’s historical emissions since 2015.

The report also found that companies’ net zero target dates form clusters by industry. For example, American Express and Capital One both targeted 2018, Apple and Microsoft each target 2030 while AT&T and Verizon both target 2035.

Meng explained that this clustering of goals by industry is likely due to peer effects, such as to remain competitive against comparable companies. She said that if people take sustainability initiatives into account when making investment and purchasing decisions, this will place pressure on firms that remain silent in the presence of peer announcements, encouraging them to reach sustainability goals, as well.

“The goal of reaching ‘net zero’ emissions, defined by the [Intergovernmental Panel on Climate Change] as the equal balancing of anthropogenic greenhouse emissions with anthropogenic greenhouse gas removals over a specific period, has become the new North Star for corporate sustainability,” the report states.

The report highlighted five key areas that can help keep global temperature rise to a minimum: standardized emissions measurement and disclosure framework, technology advancement, public policy such as carbon pricing and fuel efficiency standards, investor pressure on corporations and consumer pressure. With the proper advancement in these areas, net zero emissions by 2050 may be feasible –– which the report calls the “greatest imperative and business opportunity of the century.”

While Edmunds and Chona have since graduated from SOM and are working at Deloitte Consulting and Boston Consulting Group, respectively, Meng plans to continue her research in the future. She said she will focus specifically on health care organizations, where there is similarly “little to no sustainability reporting,” along with four other SOM professors. 

“We are planning to look at the sustainability of supply chain decisions at large healthcare organizations, and try to establish a case for sustainability,” Meng wrote to the News, “even in organizations such as hospitals where the mission to save lives is paramount.”

The S&P 100 is a stock index created in 1983 that includes the stocks of the largest and most established companies in the S&P 500.

Julia Brown | julia.k.brown@yale.edu 

Julia Brown served as University Editor on the Managing Board of 2023. Previously, she covered the University's graduate and professional schools as a staff reporter. She graduated cum laude from Yale University with a B.A. in Economics & Mathematics.