Despite business’ efforts to mitigate the effects of climate change, they are not set up for success, due to conflicting targets and abatement option availability, according to a new study by Newcastle University’s School of Engineering and the Business School, in collaboration with Northumbrian Water.

Though significant efforts are being made to reduce emissions and manage the effects of climate change, “many organizations are not efficiently contributing to global climate targets due to disparities between national ambitions, government guidance and available abatement options,” the university researchers said.

Researchers suggest introducing a carbon measurement and management process alongside a dynamic framework following a ‘Plan, Do, Check, Act’ process.

This would align climate targets, climate actions, monitoring and reporting, they added.

“Best practice is not universal, and companies are trying to balance conflicting standards whilst trying to improve their environmental performance,” author of the study, Anna Christy, PhD candidate in School of Engineering, Newcastle University, said. “Governing bodies should enable effective reporting by harmonizing international regulatory frameworks, empowering organizations to effectively assess, manage, and reduce their carbon footprints.”

The study, published in The Business Strategy and the Environment journal, found that high-level data sources and guidance are not always sufficient to define accurate accounts of greenhouse gas emissions, and that prescribing to well-known accounting standards can require inefficient interventions or sub-optimal reduction strategies.

Researchers are calling on government agencies to establish regulations and guidelines to ensure companies can make “robust assessments of their climate impact and implement abatement technologies that materially reduce their emissions rather than relying on offsets and offshoring.”

The study received data and support from Northumbrian Water Limited (NWL) which already manages and reports its emissions in line with industry best practice and international standards.

Currently, over 4,000 companies worldwide are setting climate targets, though the study reveals differences when it comes to guidance and action when companies report on avoided emissions or want to offset emissions.

Conflicting demands of regulators, shareholders and customers are often overlooked, presenting challenges when companies must select the best abatement options. This can lead to inefficient decarbonization strategies, the researchers said.

The English Water sector is a leader in Net Zero with the first sector-wide NetZero commitment, however, the researchers found that the commitment is not fully aligned with government policy or the economic regulation for the sector.

“Following the conclusion of the COP28 summit, it is crucial to address climate change policy. The study integrates innovative insights related to the carbon accounting methodology of Northumbrian Water Limited (NWL) and offers valuable findings that resonate not only not only within the English water sector but also carry broader implications for climate policy, said study co-author, Professor Marwa Elnahass, professor of Accounting & Finance at the Newcastle University Business School . “This includes recent regulatory changes by the International Sustainability Standards Board (ISSB) concerning global sustainability and climate disclosure standards.”

Using the water sector as an example, the authors recommend a more dynamic approach that considers the multiple demands on businesses, particularly prioritizing the efficient use of customer money.

The study argues that “companies should be encouraged to invest sufficient resources into developing carbon accounting methods to ensure their management strategy is attainable and aligned with global climate commitments.”