Despite 2023 being the hottest year on record, corporate progress on decarbonization has stagnated, according to a new report by Boston Consulting Group (BCG) and CO2 AI. Their study, Boosting Your Bottom Line Through Decarbonization, reveals that companies are missing opportunities to reduce emissions and reap financial benefits, with only a few countries making significant strides.
In the fourth edition of the BCG and CO2 AI Carbon Emissions Survey, 1,864 executives responsible for their companies’ emissions strategies were surveyed. Representing 16 industries across 26 countries, these companies account for approximately 45% of global greenhouse gas emissions. Despite their significant environmental impact, corporate decarbonization progress has slowed over the past year, raising concerns about their role in combating climate change.
KEY FINDINGS
- Only 9% of companies surveyed reported comprehensive emissions measurement across Scopes 1, 2, and 3.
- Just 16% have set targets for all three scopes, and 11% achieved reductions in line with those targets.
- These numbers reflect a decline from 2023, indicating a worrying trend in global decarbonization efforts.
While global corporate progress has slowed, countries like Brazil, India, and China are leading the charge. These nations excel in emissions reporting, target setting, and achieving reductions, setting an example for the rest of the world.
FINANCIAL BENEFITS OF DECARBONIZATION
Despite the overall lack of progress, 25% of surveyed companies reported substantial financial gains from decarbonization. These benefits include:
- Annual savings of over 7% of revenue, averaging $200 million per company.
- A key driver of these savings is the reduction in operating costs, achieved through improved efficiency, waste reduction, and the use of renewable energy.
UNLOCKING VALUE THROUGH FOUNDATIONAL CLIMATE ACTIONS
Companies can unlock significant value by excelling in foundational decarbonization actions:
- Measurement: Companies that comprehensively measure emissions across all scopes are 1.6 times more likely to achieve decarbonization benefits.
- Reporting: Those that fully report their emissions are 1.5 times more likely to see financial gains.
- Target setting: Setting validated emissions targets across all scopes makes companies 1.9 times more likely to realize decarbonization benefits.
By mastering these steps, companies can boost efficiency, profitability, and sustainability.
ADVANCED STRATEGIES FOR MAXIMIZING DECARBONIZATION
Beyond foundational actions, companies can accelerate their progress through advanced decarbonization strategies:
Leveraging AI for Decarbonization
The use of AI to reduce emissions is proving highly effective, with companies utilizing AI being 4.5 times more likely to experience significant decarbonization benefits. AI enhances sustainability efforts by automating routine tasks and allowing teams to focus on strategic emissions reductions.
Product-Level Emissions
Calculating emissions at the product level increases the likelihood of companies experiencing decarbonization benefits by four times, as it allows for more precise emission tracking and targeted reduction strategies.
Climate Transition Plans
Companies that adopt climate transition plans are 2.9 times more likely to reap decarbonization rewards and 3.3 times more likely to reduce emissions in line with the 1.5°C pathway set by global climate goals.
ROLE OF AI IN DECARBONIZATION
AI is emerging as a critical tool in helping businesses meet their decarbonization goals. According to Charlotte Degot, CEO and founder of CO2 AI, AI has the potential to be a “game changer,” allowing companies to optimize their emissions reduction efforts while improving their bottom lines.
“Our research shows the need for companies to double down on using AI responsibly to ensure they deliver on their climate and business targets,” said Degot.