The illusion of science-based targets in tackling Scope 3 emissions and supply chain carbon leakage

Li, Qian ORCID: https://orcid.org/0000-0003-0827-2134 2024. The illusion of science-based targets in tackling Scope 3 emissions and supply chain carbon leakage. Academy of Management Proceedings 2024 (1) , 18905. 10.5465/AMPROC.2024.18905abstract

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Abstract

This study empirically examines the impact of science-based targets (SBTs) on Scope 3 emissions and supply chain carbon leakage in a sample of international firms from 2010 to 2021. Using a staggered difference-in-differences approach with dynamic treatment effects, we investigate how SBTs affect emissions in the three years before and after their commitment, as well as how supply chain innovation and outreach strategies interact with SBTs commitment. Our results show that companies that adopt SBTs experience a short-term increase in Scope 3 upstream carbon intensity, while a significant decrease in Scope 1 and 2 emissions intensity. This short-term increase may be due to the challenge of implementing changes quickly across all three scopes and the potential for carbon leakage in the upstream supply chain in the short term. In the longer term, we find that SBTs commitment can lead to further reductions in Scope 3 upstream intensity due to the impact of supply chain innovation. Companies that establish SBTs significantly increase their supply chain engagement outreach and transparency only in the third year after target setting. Using social exchange theory as a theoretical lens, we posit that companies, perhaps influenced by the principles of subjective cost-benefit analysis and reciprocity inherent in the theory, resist engaging in sustained supply chain carbon leakage, especially under external stakeholder pressures. Our findings have important implications for companies and policymakers seeking to improve the effectiveness of SBTs in reducing greenhouse gas emissions in supply chains.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HG Finance
Publisher:	Academy of Management
ISSN:	0065-0668
Last Modified:	27 Feb 2025 13:00
URI:	https://orca.cardiff.ac.uk/id/eprint/171068

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