Key Impact Points:
- $200 Million Annual Gains: Leading companies are netting an average of $200 million annually through decarbonization efforts.
- Stalled Progress Globally: Despite escalating climate concerns, corporate decarbonization progress has slowed worldwide.
- Advanced Strategies Amplify Benefits: Utilizing AI and product-level emissions tracking significantly boosts decarbonization rewards.
Climate Progress Stalls
Despite 2023 marking the hottest year on record, a new study by Boston Consulting Group (BCG) and CO2 AI reveals a slowdown in corporate decarbonization efforts globally. Among nearly 2,000 companies surveyed, only 9% reported comprehensive measurement of Scope 1, 2, and 3 emissions. Just 16% have set targets across all three scopes, and a mere 11% have achieved emissions reductions in line with their ambitions—figures lower than those reported in the previous year.
Financial Gains from Decarbonization
Yet, a quarter of the businesses surveyed are reaping substantial financial rewards from decarbonization. These companies reported annual benefits exceeding 7% of their revenues, averaging a net gain of $200 million per year. Major contributors to these gains include reduced operating costs achieved through efficiency improvements, waste reduction, material optimization, and the adoption of renewable energy.
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Case in Point: Reckitt’s Success
Consumer goods giant Reckitt exemplifies cost-neutral decarbonization through product innovation. An initiative reduced Scope 3 emissions for its Air Wick brand by optimizing transportation, manufacturing processes, and raw material usage. David Croft, Reckitt’s Group Head of Sustainability, noted: “Our sustainable product innovation process gives us the opportunity to enable decarbonization at scale and focus on the areas where we can make the most impact on carbon.”
Unlocking Value Through Foundational Actions
The report identifies three foundational steps that significantly enhance decarbonization benefits:
- Measurement: Companies comprehensively measuring all three scopes are 1.6 times more likely to experience significant benefits.
- Reporting: Fully reporting each scope increases the likelihood of substantial gains by 1.5 times.
- Target Setting: Setting validated targets across all scopes boosts the probability of significant benefits by 1.9 times.
Advanced Strategies Amplify Rewards
Beyond the basics, advanced actions further amplify decarbonization benefits:
- AI Utilization: Companies leveraging AI for emissions reduction are 4.5 times more likely to see significant benefits.
- Product-Level Emissions Tracking: Calculating emissions at the product level makes companies four times more likely to reap substantial gains.
- Climate Transition Plans: Adopting a climate transition plan increases the likelihood of significant benefits by 2.9 times and aligns emissions reductions with a 1.5°C pathway.
Global Leaders Emerge
Companies in Brazil, China, and India are leading in comprehensive emissions reporting, target setting, and achieving emissions reductions aligned with their goals.
The Bottom Line
“This year’s survey highlights the substantial rewards some companies are reaping from decarbonization—including significant financial gains, enhanced reputations, and operational efficiencies,” said Hubertus Meinecke, BCG’s Global Leader of Climate and Sustainability.
Related Article: Guest Post: Corporate Renewable Energy Strategies – A Key Building Block for Global Decarbonization & Energy Equity
Next Steps for Businesses
To unlock these benefits, companies should:
- Prioritize comprehensive emissions measurement across all scopes.
- Commit to transparent reporting practices.
- Set and validate ambitious emissions reduction targets.
- Leverage advanced technologies like AI.
- Focus on product-level emissions for greater impact.
