Corporate carbon performance and the Science-Based Targets initiative: disentangling the effects across Scope 1, 2, and 3 emissions

Abstract Corporate climate strategies increasingly rely on science-based targets to demonstrate credible alignment with global decarbonization pathways. This study examines whether participation in the Science-Based Targets initiative (SBTi) is associated with measurable improvements in corporate carbon performance by disentangling effects across Scope 1, Scope 2 (both location- and market-based), and Scope 3. After applying coarsened exact matching, the analysis covers 3113 listed firms in Europe, North America, and Asia between 2015 and 2024, tracking outcomes for up to four years post-participation and estimating effects using ordinary least squares regression. The results show consistent improvements in Scope 1 and market-based Scope 2, while no measurable effects are observed for location-based Scope 2 and Scope 3. Robustness checks, including alternative dependent variables for corporate carbon performance and a stacked difference-in-differences analysis, corroborate these findings. Overall, the findings suggest that the SBTi serves as a quality signal of credible corporate efforts to reduce directly controllable emissions. At the same time, fostering progress on Scope 3 demands stronger guidance and enhanced monitoring. The results also highlight promising avenues for future research on cross-scope interactions and the long-term dynamics of Scope 3 reductions.