Corporate Climate Action Growing, But More Needed to Meet Net-Zero Challenge

15 Jan 2022

  • Only 20% of companies disclose their full value chain emissions and have reduction targets in place
  • Urgent work is needed for businesses to reach a tipping point in efforts to decarbonize to avoid the extreme weather events and cuts to global growth expected from the climate crisis
  • New study shows that time is ripe for bold corporate climate action to become the norm: on average companies can reduce ~50% of their emissions at no net cost across key sectors, and generate value from the transition
  • Read the report

Geneva, Switzerland, 17 January 2022 – A new study found climate action is growing across public and private sectors, but more needs to be done to meet the net-zero challenge.

In 2019, only 10% of global emissions were covered by national government pledges (29 countries) to achieve net-zero emissions. Today, 92 countries representing 78% of global emissions have made net-zero commitments at a national level.

This past year, corporate action has accelerated, but more needs to be done. Only 20% of companies both disclose their full value chain emissions and have emissions reduction targets in place, and only 9% of companies achieved an actual emissions reduction last year in line with the 1.5°C goal of the Paris Agreement.

Winning the Race to Net-Zero, written in collaboration with Boston Consulting Group, outlines how businesses can close the emissions gap, translate targets into roadmaps and ensure their business adapts and stay competitive in a changing economic landscape.

Building on industry insights, interviews with CEOs, and corporate data analysis, the study finds that climate leaders can attract and retain better talent, realize higher growth, save costs, avoid regulatory risk, access cheaper capital, and create new sources of value for customers. The report found half of job seekers are prioritizing sustainability; green alternatives to traditional products are rapidly gaining momentum; and on average companies can reduce ~50% of their emissions at no net cost across key sectors. Specifically, almost all companies can reduce their emissions by 30% at net zero costs to their business and some companies manage to almost fully decarbonize at net zero costs.

“Leadership by the private sector is critical to accelerate climate action in tandem with bold steps taken by government leaders,” said Antonia Gawel, Head of the Climate Action Platform, World Economic Forum. “We are seeing new momentum. COP26 pushed climate issues further in the global spotlight with significant commitments made. At the Davos Agenda 2022, we hope business leaders continue to increase their commitments, recognize emerging climate risks as core to their business and importantly, translate commitments into near-term business transformation and investments. This report outlines how leaders can grow green and accelerate the action we need to protect the planet.”

“Change is happening much faster than most people—and companies—realize. For example, forecasts for solar PV capacity in 2030 have increased by a factor of 36 between 2002 and 2020 while projected unit costs dropped by a factor of three,” said Patrick Herhold, managing director and partner at BCG’s Center for Climate and Sustainability. “Companies who underestimate the pace and magnitude of changes like these are at risk of grossly misjudging the impact that climate transformation can have on business models, products and company value.”

The report goes into detail and provides case studies about new debt financing, reducing risk exposure and new business models becoming mainstream. It also highlights how much full decarbonization will impact the end price of products for consumers. Prices for food and fashion products will see less than 1 euro increases to their shopping baskets. The average cost of a smart phone would increase by less than 3 euros.

For over 50 years, the World Economic Forum has been the international organization for public-private cooperation. The Davos Agenda 2022 is the focal point at the start of the year for leaders to share their outlook, insights and plans relating to the most urgent global issues. The meeting will provide a platform to accelerate the partnerships needed to tackle shared challenges and shape a more sustainable and inclusive future. Learn more about the programme and view sessions live and on-demand.

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