Are Companies Truly on Track to Meet the Paris Climate Goals? A Science-Based Approach to Measuring Corporate Climate Compliance

As the world races against time to combat climate change, understanding whether corporations are genuinely aligning with the Paris Agreement’s ambitious climate targets has never been more critical. A groundbreaking study by Rekker et al. (2022) offers a clear, science-based framework to assess if companies are truly on course to contribute to a net-zero future.

What Does it Take to Be Paris-Compliant?

The researchers propose strict criteria to evaluate corporate emissions pathways:

• Early and consistent baseline year: All assessments should start from a common, as-early-as-possible year—preferably 2015 or earlier—coinciding with the Paris Agreement signing.
• Alignment with global decarbonisation pathways: Companies must follow carbon budgets and transition plans that are compatible with the goals of limiting warming well below 2°C, ideally to 1.5°C.
• Transparency and operationalisation: Clear methods for calculating and re-aligning emission reductions, including setting science-based targets and tracking progress over time.

Applying these criteria, the study analyzed ten electric utility companies and ten cement manufacturers worldwide. The results were alarming: most companies are not on track to meet their Paris commitments. Delays in action significantly increase the pace of decarbonisation that companies must undertake later, often requiring abrupt and disruptive changes—such as rapidly retiring fossil fuel assets—to stay within their carbon budgets.

Why Do These Findings Matter?

Most existing methods for assessing corporate climate performance fall short of these strict, science-based standards. Without accurate measurement, stakeholders—investors, regulators, consumers—may be misled about companies’ climate commitments and risks. This misalignment could jeopardize global efforts to meet the Paris targets and increase companies’ exposure to transition risks and stranded assets.

A Call for Better Measurement and Accountability

Rekker et al. emphasize that adopting a transparent, rigorous framework is essential for ensuring corporate climate action is meaningful. Their approach provides a way for companies and investors alike to track progress, plan for necessary transformations, and ultimately help bridge the gap between current actions and the climate goals we must achieve.

Interested in reading the full study?

You can download the complete article to delve deeper into their methodology and findings: