Is there a fundamental problem preventing businesses from contributing efficiently to climate mitigation efforts?

Imagine trying to reach a specific destination, but your map is outdated, the signs point in different directions, and fellow travelers argue over the best route. This is a reality of the struggle many companies face when it comes to tackling climate change, a new study explains.

Despite their best efforts, companies are getting tangled in a web of conflicting national targets, inconsistent government guidance, and limited options for reducing their carbon footprint. This frustrating situation may be hindering their ability to effectively contribute to global climate goals, the research elaborates.

The challenge begins with mixed messages. Governments and regulatory bodies often send conflicting signals, with national targets and international standards failing to align perfectly. This leaves companies confused and unsure of the best course of action.

Furthermore, standardised data sources and accounting methods don't always capture the unique picture of each company's emissions. This leads to inaccurate assessments and suboptimal reduction strategies, something the world, in the current stage of the climate crisis, cannot afford.

Adding to the confusion, the research explains that some companies rely far too heavily on carbon offsets to compensate for their emissions, instead of focusing on concrete reductions within their own operations. This act might make the operations seem emission-free, effectively tricking shareholders. Much like greenwashing, this can be compared to paying someone else to complete your errands while your own to-do list remains untouched. While this might ease the immediate pressure, it certainly doesn't address the root cause of the problem.

Finally, companies juggle competing demands from regulators, shareholders, and customers. This makes it difficult to prioritise efficient decarbonisation strategies and resource allocation. This act of trying to please everyone at once often leads to compromises and suboptimal outcomes, the study reads.

To navigate this complex maze, the researchers propose a two-pronged approach. First, companies need a more dynamic framework. This means combining a carbon measurement and management process with a flexible "Plan, Do, Check, Act" cycle. This ensures alignment between climate targets, actions, monitoring, and reporting, just like having a clear, up-to-date map and constantly checking your progress.

Second, governments and regulatory bodies need to work together to create a more unified international framework, similar to the somewhat recently released ISSB standards. This step would empower companies to accurately assess, manage, and reduce their carbon footprints, similar to having clear and consistent road signs throughout your journey.

Reaching global climate goals requires a collaborative effort. Companies, governments, and regulators need to work together to create a clearer roadmap, remove conflicting roadblocks, and prioritise efficient resource allocation. Only then can companies truly navigate the climate maze and contribute meaningfully to a sustainable future.

The findings of this research have been published in Business Strategy and the Environment and can be accessed here.