A Comparative Study of Firm-Level Climate Change Mitigation Targets in the European Union and the United States

Abstract

While the debate on global and national carbon emission targets has dominated every major climate change conference, setting firm-level climate change mitigation targets has become an increasingly important issue. In this paper we present illustrative evidence on cross-country and cross-industry differences of the firm-level mitigation targets among some of the largest corporations in the European Union (EU) and the United States (US) with regard to five aspects, i.e., target adoption, target metric, target scope, target stringency, and target completion. We find that overall 25% of the firms have not set up emission targets. The EU firms are significantly more likely to use intensity targets than the US firms. The EU firms are twice as likely as the US firms to incorporate indirect emissions from the supply chain into the scope of their targets. The Energy and Materials sectors in the EU set significantly more stringent targets than their US counterparts. The energy sectors of the EU and the US in general have not made satisfactory progress toward accomplishment of the targets. Based on these findings, we discuss the most pressing issues that should be addressed by policymakers and firm managers in different regions and sectors with regard to target-setting.