Companies that choose to voluntarily report carbon emissions prefer to use in-house carbon accounting models, even if the accuracy of said models is sometimes questionable, according to new research from emlyon business school in France.
According to the study, which was conducted by François-Régis Puyou, professor of accounting and corporate finance at emlyon business school, along with professors Richard Jabot and Simon Alcouffe from TBS Business School, many firms prefer to use in-house tools, as they tend to focus on ‘avoided’ emissions rather than ‘absolute’ emissions.
As part of their study, the researchers conducted 23 interviews and undertook 28 days of observation at a company engaged in voluntary carbon reporting, and found that many firms use internal tools to ‘maintain a favourable sustainability narrative’, rather than demanding real carbon reductions.
‘Undermines meaningful progress’
‘This displacement of attention from absolute emissions undermines meaningful environmental progress and preserves the status quo,’ the researchers noted. ‘In fact, even some employees expressed unease but rarely voiced concerns publicly, meaning no real cuts in emissions were made.’
As they note, these findings present a broader challenge when it comes to climate action – sustainability reporting that prioritises appearance over impact, which in turn can mislead investors, regulators and the general public.
The researchers recommend that regulators strengthen requirements around carbon reporting, including mandating the disclosure of absolute emissions and detailed mitigation plans to prevent greenwashing.
‘A crucial gap’
“This research highlights a crucial gap between knowing about emissions and acting to reduce them,” said Puyou. “Managers may use carbon accounting to reframe impact rather than confront realities, risking that sustainability reporting legitimises business as usual, and no real efforts to act on cutting emissions.”
The researchers also call for further investigation into how managers can be supported to engage with ‘uncomfortable knowledge’ within their organisation and act on it constructively. Read more here.
