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A new Searchlight Institute report joins a growing chorus arguing that corporate climate targets do more harm than good.

When Jane Flegal was working in market development for Frontier Climate, a $1 billion initiative to catalyze advances in carbon removal, she had what she called a “radicalizing experience.”
Frontier went out to corporate sustainability teams, selling them on large carbon removal offtake agreements with vetted startups that were developing technologies to suck measurable amounts of carbon directly out of the air. These were more expensive than the carbon offsets companies could buy to support forest conservation or clean cookstoves in Africa, but the investment would support innovation important for fighting climate change. In return, the companies would eventually be able to count the resulting carbon removal toward their net zero emissions targets.
Most companies, however, were more concerned about the cost. “We were trying to get companies to spend more than $1,000 per ton on a new technology we know the world needs,” Flegal told me. “Making that pitch to a corporation when they could also just go make the exact same claim with a $4-a-ton carbon offset credit was a crazy-making experience.”
The revelation, for Flegal, was that the prevailing paradigm for corporate climate action — a single-minded focus on carbon accounting — was not just inadequate, but actively harmful to bringing about the systems-level change required to decarbonize the economy. It incentivized companies to optimize for reducing their individual carbon footprints and failed to recognize the arguably more impactful contributions they could be making to systems change. “Most of the best things they could be doing are just not legible at all in the existing accounting frameworks,” she said.
Flegal fleshed out her critique in a paper published Monday by the Searchlight Institute, a center-left think tank where she is now a senior fellow. The data center boom has exacerbated these perverse incentives, she argues. Tech companies are pursuing corporate power purchase agreements to fulfill their individual clean energy commitments, but mostly failing to help break down the structural barriers to decarbonizing the grid, such as transmission constraints and interconnection backlogs.
The paper challenges the logic of treating a “complex, global, sociotechnical problem as if it were a matter of property rights,” where investors and the public expect companies to own their individual carbon messes. Flegal proposes some alternative measures by which to evaluate corporate climate ambition. One is the quality of a company’s investments — are they causing more clean energy or crucial climate infrastructure to get built than would be otherwise based on market conditions? How many miles of transmission have they financed, or policy proceedings have they influenced? She also calls for companies to be explicit about their theory of change and report how they are taking action consistent with that theory.
“I recognize that these are not perfect metrics, but let’s be real, neither are the ones we have today,” she told me. “The danger of the ones we have today is that they imply a false precision that could be worse for climate outcomes than just being honest about uncertainty.”
The climate community has always fought about carbon accounting, but recently the quarrel has reached a fever pitch. The Greenhouse Gas Protocol, a nonprofit that sets voluntary standards for how companies should measure their emissions, is in the middle of overhauling its rules, a process that has sparked major schisms over how to account for companies’ clean electricity purchases, the carbon stored in forests, and other complex aspects of corporate carbon bookkeeping.
At the same time, the Science Based Targets Initiative, a separate group that acts as an arbiter of whether companies’ climate plans are consistent with the goal of limiting global warming to 1.5 degrees Celsius, has been updating its own standard for “corporate net zero.” A third group, the International Organization for Standardization, is also revising its greenhouse gas reporting rulebooks.
The challenge across all of these efforts is developing standards that are scientifically rigorous but not so rigid as to discourage companies from acting. Companies are lobbying these revision processes to get the rules they want, but many experts worry the outcomes will enable greenwashing.
Flegal joins a growing chorus of thought leaders arguing that this system that feigns precision and prioritizes compliance with an impossible bottom line risks pushing companies away from doing anything at all. Some propose getting rid of individual carbon targets altogether in favor of more qualitative reporting, while others advocate for creating a separate space for companies to earn recognition for their harder-to-measure “contributions” to fighting climate change.
In September, Michael Gillenwater, the executive director of the Greenhouse Gas Management Institute, who has been working on carbon accounting issues for more than 20 years, called for a “paradigm shift” in corporate climate reporting. He and Derik Broekhoff of the Stockholm Environment Institute, another 20-year soldier in this space, argue that boiling down a company’s climate impact to a single inventory of emissions traps “companies in a ’doom loop’ where they are simultaneously criticized for not taking full responsibility for indirect emissions and for greenwashing when they attempt to address these emissions through market-based mechanisms,” such as renewable energy certificates.
They propose instead a “multi-statement” reporting framework in which companies would separate their actual, physical emissions from their investments in carbon offsets, renewable energy certificates, and other market-based tools for climate mitigation. This system reframes carbon credits from “compensating” for a company’s ongoing emissions to playing a more philanthropic role in achieving global net zero and “eliminates the perception that companies can be absolved of responsibility through offsetting,” they write. They also propose a third section where companies would report on remaining barriers to decarbonizing their particular business. Companies could set targets for each section individually, but would not be allowed to combine them into a single performance metric.
Robert Hoglund, the co-founder of the carbon removal tracking site CDR.fyi and head of climate at Milkywire, a corporate advisory firm, published yet another idea in a paper earlier this month. He and his co-author argue that the distinction existing frameworks make between a company’s “direct” and “indirect” emissions doesn’t actually illuminate what’s within its control to reduce. They recommend companies split their net zero targets into two categories, separating “unconditional” emissions cuts — those that are currently feasible — from “conditional” reductions, or those that depend on changes in policy, infrastructure, technoeconomics, etc.
Creating a conditional target “does not make it optional,” they write. “It creates an obligation to help build the world the target assumes. That means policy advocacy, supplier engagement, financing climate solutions, supporting carbon removal, and other system-changing actions are not side activities but flow from the target itself.”
The Science Based Targets Initiative published its new net zero standard this past week, and it appears to adopt at least some of the ideas Flegal, Gillenwater, and Hoglund proposed — namely, attention to systemic constraints. It shifts from looking only at absolute emission reductions to recognizing companies for putting their “best efforts” toward net zero. It stops short, however, of explaining how SBTi will judge what counts as a “best effort.” It also allows companies to use some kinds of carbon certificates to lower their emissions on paper.
Based on an initial read, Hoglund told me he thought SBTi made some positive changes. Flegal hadn’t had a chance to dig into them yet when we spoke. Another critic I spoke to was less pleased.
If Lisa Sachs, the director of Columbia University’s Center on Sustainable Investment, had her way, companies would get rid of net zero targets altogether. She published her own treatise on the subject in May, pointing out that corporate net zero “relies on a mistaken aggregation logic.” It assumes that if every company works to reduce, offset, or neutralize their own emissions, the efforts will sum up to global net zero. Like Flegal, she told me that not only is that impossible without systems change, but she fears that company-level net zero goals “disincentivize the things companies can and should do that would have maximum systems impact.”
While it’s relatively common today for companies to talk openly about the systemic barriers they face in decarbonizing, it’s much more rare for them to say what they’re doing about it. I asked Flegal whether she truly believed sustainability officers would be able to get CEO approval for investments in “systems change,” which is more difficult to break down into clear KPIs.
She pointed out that a lot of companies already make significant philanthropic investments, and this could be put in that bucket. In some cases, like when grid constraints are a barrier to powering a new facility, they could argue that investing in transmission lines is a strategic move and not just part of their climate commitment.
Actions like lobbying in support of regulatory reform and other policy changes seem like a harder sell. The investor-led initiative Climate Action 100+ tracks how companies are attempting to influence climate-related policy debates, and has consistently found that few companies — just 2%, in the latest count — align their lobbying activities with their climate goals.
Reading these papers took me back to 2019 and 2020, when many companies first made net zero commitments. In one sense, it felt like a sea change — all these powerful corporations publicly dedicating themselves to a net zero future — but it was also dubious. They all seemed to have a different definition of what “net zero” meant. For some oil and gas companies, it meant zero-ing out the emissions from their operations, but not from the oil and gas they sold. A lot of companies made the pledge without providing any details about how they would achieve it. SBTi started developing its first net zero standard in 2020 to address this problem by creating a common definition and set of expectations. While having SBTi validate a company’s net zero target is entirely voluntary, more than 11,000 companies have done it.
When I mentioned this history to Flegal and Sachs, they countered that the problem SBTi is trying to address is downstream of the actual problem — that a voluntary net zero framework for companies creates incentives that are not aligned with what really matters for decarbonization.
Both also raised the opportunity cost of the enormous intellectual and financial capital that has gone into refining all of these accounting methodologies and producing reams of reporting to comply with them. “All of these organizations and rule setters for the rule setters for the rule setters, I think we’ve gotten lost in the sauce a bit,” Flegal said.
“These frameworks have become a business — literally a business, in SBTi’s case,” Sachs said, since it has a for-profit arm that validates companies’ reporting for a fee. “I’d rather have a few leaders who raise the tide than to have 11,000 companies aligned with SBTi, and to be finding ourselves in five years figuring out another way to lower the standard.”
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The gains set up Democrats to potentially flip the utility commission in 2028.
The blue wave has officially reached the Arizona down ballot. Though two Democratic wins in the Arizona Corporation Commissioner race might not drum up the same national coverage as, say, flipping a Senate seat in South Carolina, the election of Clara Pratte and Jonathon Hill to the five-seat commission could have major energy implications in a state that already saw renewables champions take over the state’s largest utility earlier this year. (With close margins in slow-to-count Arizona, the ACC race wasn’t officially called until Thursday evening, when both Republicans conceded.)
Arizona is one of 10 states that elects its utility commissioners, with the ACC regulating private water, gas, and electric companies in the state. That includes overseeing Arizona Public Service and Tucson Electric Power, where bills have increased 52% and 10%, respectively, over the past five years, per Heatmap’s data. (The publicly owned Salt River Project, which serves much of the Phoenix area, operates largely without ACC oversight.)
The ACC has been wholly in Republican hands since 2024; during that time, the body repealed Arizona’s Electric Efficiency Standards, which had incentivized utilities to pursue energy efficiency programs, as well as the state’s Renewable Energy Standard and Tariff, which supported the build-out of solar and wind power. “They were a rubber stamp for all our utilities and refused to even consider anything in support of protecting our climate,” Arizona State Representative Brian Garcia, who was reelected on Tuesday, said during a press call with Lead Locally this week. “At one instant, one of the commissioners told someone who got sick from the heat — who turned off their power and their AC — ‘Well, that’s on them.’ And I think our state and our communities have had enough of that.”
Though the ACC remains under Republican control despite the two Democratic additions, it puts full control within a one-seat striking distance for progressives when the other three seats are up in 2028 — a much easier fight to win, and potentially a huge one, given that the party hasn’t controlled the ACC since 1997.
Of particular concern in 2026, though, was the development of data centers. Ralph Heap, a Republican in the race who made the League of Conservation Voters’ 12-person “worst of the worst” list out of all 6,342 seats up for grabs nationwide on Tuesday, previously told the Arizona Capitol Times he supports the data center build-out in the name of American AI dominance. Incumbent Republican Kevin Thompson, meanwhile, has argued that the commission “has done its job of shielding ratepayers from costs associated with servicing data centers and other large load users.”
Voters evidently disagreed, backing Hill and Pratte, who say they support a data center moratorium. “The Corporation Commission might not be able to implement a pause, but I think they can certainly be a clearinghouse for information,” Hill told Yellow Sheet Report, an Arizona political tipsheet, acknowledging the relatively limited role the ACC actually has in regulating data centers beyond demanding transparency of utilities’ energy service agreements.
There are other concerns, too. Climate organizers zeroed in on the ACC race because of its influence over the solar buildout in the nation’s sunniest state, where nevertheless six of the state’s 15 counties have a restrictive ordinance against the resource, Heatmap Pro data shows. Commissioner-elect Pratte, a member of the Navajo Nation and the first Indigenous person elected to statewide office in Arizona, is also the co-founder of Navajo Power, a clean-energy company that helps tribal nations develop solar energy and storage projects.
Arizona Public Service and Tucson Electric Power also both have pending rate increase requests under review by the ACC; a 14% rate increase for residential customers and a 45% or more increase for data centers in the case of APS, and a 10% increase for residential customers in the case of TEP. (The APS’ rate case will likely be decided in December, before Pratte and Hill take their seats.)
Additionally, State Senator Lauren Kuby has introduced a bill to change the name of the ACC to the Arizona Public Utility Commission, a move intended to highlight to voters “its significance to their daily lives,” as she told the Arizona Capitol Times earlier this year. Sure enough, John Qua, the campaign director at Lead Locally, and Caroline Spears, the executive director of Climate Cabinet, previously told my colleague Matthew Zeitlin that part of the trouble with supporting progressive candidates in the ACC race was communicating to Arizona voters that, like the race for governor, it is a partisan election.
But given how things turned out Tuesday nationwide — a referendum on cost-of-living and, perhaps, data centers — it seems they needn’t have worried. Arizonans worked out exactly who to blame.
Electricity companies look like one of the biggest losers of the 2026 midterms.
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I’m still wrapping my head around the size and scale of the Democratic victory on Tuesday. I suspect Wall Street is, too. Yesterday, the S&P 500 gained about 1.6% as investors saw an upside in the Democratic blow-out. Today, they lost their nerve: The S&P fell almost 4.4%, and the tech-focused Nasdaq slid by more than 5%. That AI-loaded index is now down more than 10% from its all-time high in October, which means it’s technically entered a “correction.” (If it drops by 20%, it’ll be in a bear market.)
Amid the market carnage, utilities have held out alright. The Vanguard utilities index fell by less than one percent today, and two of the country’s biggest vertically integrated electricity monopolies — Duke and Southern Company — actually gained ground. Other power companies — including Xcel Energy, which serves the Midwest and Dominion Energy in the Southeast — did okay as well.
I find that surprising, because utilities strike me as one of the biggest losers of Tuesday’s election.
That’s partly because utilities showed up in surprisingly specific ways in candidate policy proposals this cycle. Last night, I wrote about how Senate Democratic candidates took a fairly moderate tack on climate and energy policy this year. What I didn’t mention is that Adam Hamilton, Kansas’ newly elected Democratic senator, called out utilities specifically in his proposal for major new transmission. One of his four big energy policy proposals is as follows:
Require competitive bidding processes for transmission projects instead of handing utility companies lucrative contracts at taxpayer expense. When a nearly half-billion-dollar transmission project is handed to a single utility with no competitive bidding, Kansas ratepayers can end up paying far more than they should. Competitive bidding has been shown to cut these costs by twenty to thirty percent. Politicians on both sides of the aisle should speak out against harmful policies that avoid competitive bidding, like the $493 million project that was handed to Evergy.
I mean, sounds great to me, but transmission policy does not normally rank among Democrats’ biggest applause lines. Hamilton’s other energy ideas are far more conventional, including ending Trump’s tariffs, his war on domestic energy projects, and restoring the clean energy tax credits.
Hamilton wasn’t alone in targeting utilities. David Pomerantz, who leads the watchdogging Energy and Policy Institute, has a great blog post today looking at utility politics in the 2026 election. He argues that we’re about to see utilities endure a much tougher oversight regime than they’ve faced in decades.
Why? There was much more attention on public utility regulators in this election than there have been in previous ones, he argues. Historically, public utility commission appointments have been sleepy affairs. But “incoming new governors Amy Acton (Ohio), Jocelyn Benson (Michigan), David Crowley (Wisconsin), Aaron Ford (Nevada), and Hannah Pingree (Maine) all campaigned overtly on a promise to appoint commissioners who would put ratepayers first,” he writes. In a few of those gubernatorial races, the losing Republican candidate had also promised to fire or replace the existing utility commissioners.
It goes beyond just oversight. The incoming governors in Pennsylvania, Iowa, and Maine have all vowed to reform or lower utility profits. Democrats won a majority on Georgia’s public utility commission — and flipped two seats in Arizona’s five-person board — promising to look closely at the utility profit structure, too.
In one state, voters even directly intervened to limit utility action. Michigan’s Proposition 2, which bars regulated utilities from making campaign contributions, passed overwhelmingly with more than 80% of the vote (although it now faces a legal challenge). And more than 100 politicians, including the winning Benson, pledged not to take utility campaign contributions.
Anyway, it’s an interesting post. You might remember I spoke to David last week for Shift Key about how the bipartisan permitting legislation would weaken monopoly utilities. As my colleagues Jael Holzman and Emily Pontecorvo wrote yesterday, Democrats and Republicans are now negotiating a top-down amendment to that permitting package. We’ll soon learn if the new version — which could come out any time in the next two weeks — preserves the same tough-on-utilities provisions that Dave praised.
When it comes to energy and data centers, everyone loves Texas. Its pro-business political consensus, unusually deregulated electricity market, wide-open plains, sunny skies, and large natural gas and oil deposits have attracted data center developers, renewables developers, liquefied natural gas export terminals, and battery storage entrepreneurs alike.
But this all happened under decades of unified Republican control of Texas’ government. That’s ending on January 19, when Gina Hinojosa is sworn in as governor alongside every other holder of statewide elected office who won this year. In Austin, they will join a Democratic majority Texas House of Representatives, which has been under Republican control since 2003.
Immediately following the election, stocks linked to data center development in Texas swooned — Elon Musk’s SpaceX is down 12.5% since Tuesday, data center developer CoreWeave is down almost 19%, Oracle is down 9%, Texas-based independent power producer Vistra is down 19%. Sterling Infrastructure, a civil construction company headquartered outside Houston, has seen its shares fall 32%.
On the campaign trail, Hinojosa called for a moratorium on data centers until the legislature could pass legislation putting guardrails around development, including protecting residential ratepayers from electricity price hikes and giving local communities more leeway to restrict and condition development. Two weeks before election day, she released a video criticizing Governor Greg Abbott’s “Batch Zero” review process — which had been broadly characterized as a “pause” when it was announced over the summer — for allowing new permits, and she said that she would issue a “ban” on all data center approvals until new laws could be passed.
When Abbott introduced his pause over the summer, Texas’s electricity market ERCOT had 474 gigawatts of data center interconnection requests in its queue (almost all from data centers), a figure he said was around five times the electricity market’s peak demand. That review is due to end next month, shortly before Hinojosa is due to take office, leaving little time for new projects to get approved before the moratorium goes into effect.
Some observers and investors took a sanguine view of Hinojosa’s data center policies. Gavin Baker, a longtime investor in SpaceX, said on X that Hinojosa’s policies “sound reasonable” and pointed to an interview she gave saying that the moratorium would be on new permits and would not affect the pipeline of permitted projects.
The data center and energy industry, however, is in wait-and-see mode when it comes to the severity of the moratorium.
“If she was thinking of trying to go after projects that had begun the construction process,” Brandt Vermillion, U.S. research lead at Modo Energy, said, “I think it would change the overall outlook a ton.”
According to Modo Energy analysis, there are some 25 gigawatts worth of projects under construction in Texas, another 4.6 gigawatts permitted, and another 90 gigawatts that are either just announced or have only submitted grid studies. If Hinojosa “is only going after non-permitted projects,” Vermillion added, then anyone thinking about the future path of data center development in Texas should be more concerned about supply chain constraints like obtaining enough chips to power the data centers.
That being said, the Texas legislature’s session doesn’t end until May 2027, meaning that Hinojosa’s pause could last several months before lawmakers put guardrails into law.
“I don’t think we’re going to not build another data center in the state,” Joshua Rhodes, a research scientist at the University of Texas at Austin, told me. “But I think that they’re going to be under quite a bit more scrutiny.”
That being said, analysts are now much more uncertain about the future path of electricity demand in the state. “Texas demand is difficult to project after Gina Hinojosa’s surprise win,” Jefferies analyst Julien Dumoulin-Smith wrote in a note to clients on Thursday.
That means more trouble for developers in Texas, especially for storage projects, which had already been seeing extremely volatile monthly revenue.
“Batteries and energy storage have been counting on demand to go up because they’re having a rough time out there right now in terms of revenues,” Rhodes said. “Demand will have a pretty big impact on supply.”
One thing the battery storage industry, as well as solar and wind developers, can cheer is that Democratic control of the governorship and the state House means that the threat of anti-renewables bills has fallen to essentially zero.
The renewables industry is hoping that data center development does continue in Texas, but that it looks more orderly and grid-connected.
Going forward, Vermillion expects that data center developers will have a harder time getting tax abatements, which means that a “well-capitalized hyperscaler” could potentially still pursue projects.
“Project A that was going to go about development in a certain way of seeking tax abatements and buying a bunch of reciprocating engines and trying to run themselves off grid” is much less likely to be able to go forward in Hinojosa’s Texas, Vermillion told me, especially as she is able to appoint new commissioners to the Texas Public Utility Commission or the Texas Commission on Environmental Quality.
Tim Woodruff, the data center lead at Modo, told me similarly. “In the near term, if you're one of the neo clouds, maybe now you start pushing a little harder on your projects that you have in MISO or in CAISO,” he said.