Strategic Actions to Reduce Corporate Greenhouse Gas Emissions: Pairing Internal Climate Oversight with Science-Based Targets

What strategic actions help firms achieve credible reductions in greenhouse gas emissions? We examine the sequencing and effectiveness of internal governance mechanisms and external standards, distinguishing actions associated with real progress from symbolic claims. We analyze changes in scope 1 and scope 2 emissions for 146 of the world’s largest multinational enterprises (MNEs) from 2012 to 2023 to assess what strategic actions are associated with climate change mitigation. Widely adopted climate oversight mechanisms—including a climate strategy, board responsibility, internal targets, and verification—do not distinguish firms that reduce emissions from those that increase them. By contrast, having science-based targets externally validated by the Science Based Targets initiative (SBTi) in place for more years is consistently associated with faster emission reductions. Among MNEs adopting SBTi-validated targets, all had previously established internal climate oversight, suggesting a sequence from internal preparation to external validation. Assigning responsibility to the CEO and linking CEO compensation to climate goals is associated with higher emissions in our sample.