In response to pressures from consumers, investors, governments, and nongovernmental organizations, many companies proactively manage and report on environmental performance. Budgeting is a very effective tool to motivate managers to lessen carbon emissions. Several companies, such as British Telecom and Unilever, set science-based carbon reduction goals based on climate models.
These science-based targets are stretched to spur innovation, prompt the development of new technologies and business models, and prepare companies for future regulatory and policy changes. What is the effect of stretched targets on actual emission reduction? Some recent research shows that companies that set more difficult targets (to be achieved over several years) complete a higher percentage of such targets. This is particularly true for carbon reduction projects in high-polluting industries that require more innovation.*