Why Companies Aren’t Living Up to Their Climate Pledges

Firm commitments to sustainable practices are becoming more and more common. Many organizations are struggling to deliver on their commitments according to new research. The main issue is setting and balancing priorities. There are significant differences of opinion within the leadership team on how to balance short- and long-term priorities. Many boards and executives don't have metrics or Key Performance Indicators to track progress. Less than 3% of companies have a full set of ESG KPIs in place. Companies will struggle to align executive remuneration with ESG targets without metrics. The authors offer five remedies to help companies get back on track: develop a shared vision forsustainability, invest in education to drive needed understanding and skills through the company, analyze both financial and non-financial factors related to strategic choices, establish Key Performance Indicators, and tie executive compensation to sustainable targets

Firm commitments to sustainable practices are becoming more and more common. More than 700 of the largest 2,000 publicly traded companies have made net zero pledges. More than half of the S&P 500 have emission reduction targets.