Researchers have found that companies tend to favour internal environmental monitoring metrics and processes that allow them to grow, and don’t publish figures showing increased carbon emissions.
New research from emlyon and TBS Business Schools has revealed businesses that voluntarily report their carbon emissions favour in-house carbon accounting tools over standardised models, despite the former sometimes producing false reports.
The researchers discovered managers tend to rely on in-house reporting tools, as these typically highlight avoided emissions rather than the total amount of pollutants produced or caused. This, ultimately, helps a company’s sustainability performance look better.
The case study involved 23 interviews and 28 days of observation of one company that was voluntarily reporting its carbon data. The study concluded that internal tools were being used strategically to shape the story companies tell about their environmental impact, highlighting progress in a way that also supported continued economic growth. Unfortunately, this method avoided the tougher work required to genuinely report on, and ultimately reduce carbon emissions.
By shifting focus away from absolute emission metrics, companies prevent real environmental progress, with operations continuing as normal. It’s no surprise that a number of employees reported being uncomfortable with this approach, but felt they could not raise concerns. As a result, companies continued with such processes, and did not reduce emissions in any meaningful way.
Researcher and professor of accounting & corporate finance at Emlyon Business School, François-Régis Puyou, emphasised the issues that arise from this “false” reporting. “The research highlights a crucial gap between knowing about emissions and acting to reduce them. Managers may use carbon accounting to re-frame impact rather than confront realities, risking that sustainability reporting legitimises business as usual, and no real efforts to act on cutting emissions.”
The findings mean one thing – genuine climate action can remain stagnant, and sustainability reports prioritise appearances over environmental impact. This has a knock-on effect to mislead the public, clients, regulators, and investors. It also slows any shift to a lower carbon economy.
Puyou and fellow researchers, Professors Richard Jabot and Simon Alcouffe from TBS Business School, warn that such “growth-friendly” carbon models are not just misleading, but draw attention away from the urgency of reducing carbon emissions. They believe internal models could even be used to excuse or obfuscate a company’s growing carbon footprint.
To combat this, the researchers have called for regulators to strengthen laws that require companies to report their true absolute emissions and extant plans of how organisations intend to reduce carbon emissions. The researchers suggest further study may also be required to help managers deal with the inconvenient truths regarding their company’s environmental impact. Only then can firms drive sustainability and reach meaningful reductions in carbon emissions.
(Image source: “Keeping Up Appearances” by twm1340 is licensed under CC BY-NC-SA 2.0.)
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