Corporate progress on decarbonization has slowed over the past year, according to new analysis from consultancy firm Boston Consulting Group released on 18 September. However, for those who are making progress, there are substantial benefits, report the authors.
The report “Boosting Your Bottom Line Through Decarbonization” surveyed 1,864 executives with a brief to oversee their company’s emissions measurement, reporting, and reduction initiatives. The respondents represent 16 major industries across 26 countries, and collectively are responsible for approximately 45% of global greenhouse gas emissions. Each organization has at least 1,000 employees and annual revenues ranging from $100 million to more than $20 billion.
Firms identified as “climate leaders” in this, fourth edition of BCG and CO2 AI’s Carbon Emissions Survey were said to have realized significant value from their decarbonization efforts, including financial benefits equal to more than 7% of their revenues, equating to an average net benefit of $200 million a year. “To achieve these financial benefits, leading companies are stepping beyond foundational actions, such as measuring and reporting emissions, and adopting more advanced actions, including using AI in their climate efforts and calculating product-level emissions,” said an announcement about the study.
Of the nearly 2,000 companies surveyed in 2024, 9% said they comprehensively report Scope 1, 2, and 3 emissions. In addition, only 16% said they have set targets across all three scopes, while just 11% reported emissions reductions in line with their set ambitions. These statistics are all lower than those reported in 2023.
Nonetheless, there are some signs of progress, say the authors. Companies in Brazil, India, and China are leading in terms of comprehensive emissions reporting, target setting, and reducing emissions in line with ambitions. And even as overall progress seemed to slow, 25% of the businesses in the survey reported substantial financial benefits from decarbonization. One of the leading sources of these benefits was a reduction in operating costs, often resulting from initiatives focused on efficiency, waste reduction, the rationalization of materials or footprints, or the use of renewable energy.
Cost-neutral decarbonization
More than half of the companies surveyed reported said they believe their emissions can be reduced by 10% to 40% at a net cost saving. Reckitt, a multinational consumer goods company, did so through product innovation. One initiative, for example, cut Scope 3 emissions associated with the company’s Air Wick brand by reducing emissions in transportation, manufacturing, and the raw materials used to create the fragrances. According to David Croft, Reckitt’s group head of sustainability, “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.”
Leading countries
Leading climate beneficiaries were most often found in countries that excel in measurement, reporting, and target setting and that are highly aligned with reducing their emissions according to a 1.5ºC pathway, said the authors.
The climate beneficiaries in the survey, according to the authors, “capture value by excelling in both foundational and advanced climate actions”. Foundational actions are the first steps in a company’s decarbonization journey. Maximizing these actions often results in excellence in decarbonization and significant value capture:
• Measurement. Companies measuring all three scopes comprehensively are 1.6 times more likely to experience significant decarbonization benefits.
• Reporting. Companies fully reporting each scope are 1.5 times more likely to experience significant decarbonization benefits.
• Target Setting. Companies setting validated targets for each scope are 1.9 times more likely to experience significant decarbonization benefits.
Alongside these foundational elements, companies can increase their emissions reduction and potential rewards by taking advanced actions. The survey appeared to find that these advanced actions, typically enabled by technology investments, increase accuracy, impact, and value capture.
AI usage
Companies that use AI to help reduce emissions were said to be 4.5 times more likely to experience significant decarbonization benefits. “This is primarily because AI-powered tools increase the efficiency of sustainability efforts by automating tasks, allowing teams to focus more on strategic activities, such as emission reductions and value capture,” said an announcement about the survey.
For example, a global multicategory food company used AI to improve its emissions measurement. Due to heavy reliance on its suppliers’ products, 98% of the company’s carbon footprint is in Scope 3. Accurately calculating these emissions had become a daunting task. To resolve the issue, the company used AI to match more than 115,000 products to individual emissions factors. This effort significantly automated the company’s emissions-measurement process, improving accuracy and increasing efficiency, according to the findings.
Product-level emissions
Companies that calculate product-level emissions are four times more likely to experience significant decarbonization benefits, in the findings reported by the survey’s authors. The goal of measuring product-level emissions is to quantify the climate impact of a product throughout its life cycle, at the unit level. Doing so enables portfolio optimization, the support of green claims, and many other potential decarbonization improvements. In addition, companies say that these calculations allow them to prepare for future regulations and advertise product-level sustainability.
Calculating high-quality product-level emissions is significantly more difficult than calculating a corporate-level GHG footprint due to the extensive supplier partnership, data processing, and analysis required. However, while the effort involved is substantial, the benefits are said to be clear. Symrise, a global supplier of ingredients for fragrances, flavorings, and active ingredients for cosmetics, has begun computing product carbon footprints (PCFs) for a large portion of its 35,000 products. To take on this monumental challenge, Symrise industrialized its PCF process, helping the company meet the requirements of various standards (including Together for Sustainability, Product Environmental Footprint, and others) across its diverse portfolio and ensure the success of its sustainability initiatives.
Climate transition plans
Companies that adopt a climate transition plan were said to be 2.9 times more likely to experience significant decarbonization benefits and 3.3 times more likely to reduce emissions in accordance with a 1.5ºC pathway. Climate transition plans outline how a company will achieve its climate goals via abatement initiatives while showing a serious commitment to measuring, reporting, and meeting targets. The most successful plans clearly enable companies to maximize not only their decarbonization efforts but their benefits as well.
