Balancing simplicity and complexity through corporate emissions benchmarking

Abstract:

Standardized quantitative emissions benchmarking is essential for corporate climate accountability, yet recent literature has critiqued this approach. We argue for structured pluralism with budget compliance — balancing methodological flexibility while preserving the disciplining power of carbon budgets. The corporate climate reporting landscape is evolving rapidly. Companies are increasingly required to demonstrate alignment with the Paris Agreement, and international standards such as the International Financial Reporting Standards Sustainability Disclosure Standard 2 (IFRS S2) and International Organization for Standardization Net Zero Guidelines (ISO Net Zero) are driving demand for clear quantitative benchmarks. Yet some academic responses to these developments have grown increasingly critical — with several 2024 papers questioning whether standardized quantitative approaches can adequately capture the complexity of evaluating corporate climate commitments or performance. In this Comment, we caution against a move away from (standardized) forms of emissions benchmarking. Although these calls arise from legitimate concerns, they risk undermining the integrity of corporate climate accountability and complicate the shift from plans to results. Our central argument is that effective benchmarking must strike a balance between simplicity and complexity across both allocation mechanisms and underlying pathway selection. At one end of the spectrum lie overly simplistic approaches, such as sector-agnostic targets using one decarbonization pathway. At the other extreme, we see open-ended highly contextual narratives that resist standardization. We argue that benchmarking is most suitable when it avoids both extremes and this middle ground should be the primary focus of further research