Key Takeaways:
- 51% of companies leverage sustainable finance, with green bonds leading at 53%.
- Energy sector leads in emissions targets, but Scope 3 reporting remains limited across industries.
- Companies prioritize biodiversity, yet adoption of TNFD disclosure standards remains low.
Sustainability Finance on the Rise
A new study conducted with the International Finance Corporation (IFC) analyzed 104 companies in emerging markets, revealing a significant shift toward sustainable finance. Over half (51%) of companies are using green finance instruments, with green bonds (53%) as the most common, followed by sustainability-linked bonds (30%) and loans (25%). Water & Waste (75%) and Energy (74%) sectors lead in sustainability-linked finance adoption, while the Transport sector lags at 16%.
Expanding Gender Equality Reporting
Companies are increasingly disclosing gender-related data, particularly in the mining and energy sectors. However, few set public gender diversity targets. Sectors such as TMT, transport, water, and waste still have room to improve in gender transparency. Additionally, broader inclusion efforts beyond gender—such as disability and underserved communities—remain underdeveloped.
Decarbonization Targets & Scope 3 Challenges
- Energy companies lead in comprehensive Scope 1, 2, and 3 emissions targets (38%).
- Transport sector ranks highest in carbon neutrality and net-zero commitments (42%).
- Water & Waste sector lags, with only 13% setting comprehensive emissions targets.
- Scope 3 reporting remains weak, with 44% of companies failing to disclose such emissions.
Nature-Based Solutions & Biodiversity
There is a growing push for nature-based solutions, including conservation and sustainable land management. However, only 10 out of 104 companies have adopted the Taskforce on Nature-related Financial Disclosures (TNFD) framework, signaling slow progress in biodiversity reporting.
Community Benefit-Sharing Gains Momentum
Among energy and infrastructure companies, 84% disclose education and skill-focused initiatives, while 48% support humanitarian and environmental efforts. Reporting on community climate resilience remains low (8%), with Latin America and Africa seeing the most focus on infrastructure, cultural heritage, and healthcare improvements.
Overcoming Challenges & Accelerating Impact
Emerging markets stand to benefit from COP29’s commitment to triple climate finance, increasing annual funding to $300 billion by 2035. Additionally, multilateral development banks pledged $120 billion in climate finance for developing countries by 2030.
Despite progress, companies still face major hurdles in supply chain decarbonization. The KPMG 2024 CEO Outlook revealed that 30% of executives cite supply chain complexity as the biggest barrier to climate ambitions. Greater standardization of sustainability reporting, particularly in Scope 3 emissions, will be critical for progress.
Biodiversity reporting is growing among global firms, but progress has slowed, indicating a need for technical support to enhance nature-based solutions. Transparency in gender diversity targets also requires improvement, particularly in the water & waste, TMT, and transport sectors.
Related Article: Green, Social, and Sustainability Bonds 101: Financing a Better Future
