Corporate progress on decarbonization has slowed

Executives from nearly 2,000 companies across markets and industries, collectively responsible for about 45% of global greenhouse gas (GHG) emissions, were polled in the fourth annual BCG x CO2 Ai carbon survey. The results found that corporate progress on decarbonization has slowed, despite 2023 being the hottest recorded year in recent history.

At a glance, the results leave much to be desired on corporate climate action and indicate a downturn from the progress reported in 2023.:

• Only 9% of companies reported comprehensively on their Scope 1, 2, and 3 emissions.
• Only 16% of companies have defined reduction targets across all scopes
• Only 11% have successfully reduced their emissions in line with their ambitions.

At a time when urgent climate action is crucial, the downturn in progress is both alarming and detrimental to our collective efforts to tackle climate change.

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2023 vs 2024: The gap between decarbonization goals and reality is widening

When we look at the data on global emissions, we notice that since the mid-18th century, emissions have continued to rise rapidly. By 1990, emissions had quadrupled and reached more than 20 billion tonnes. Based on data from the Global Carbon Budget (2023), the graph below shows a rapid rise in global emissions, with the Industrial Revolution acting as a tipping point.

Considering carbon dioxide emissions are one of the primary drivers of global climate change, major corporations must come together to comprehensively measure, report, and reduce their carbon emissions at scale. When we looked back on the findings of the 2023 carbon survey and compared them to the 2024 outcome, we found that this hasn't been the case. 

In 2023, 10% of the surveyed companies responded that they are comprehensively measuring and reporting on their Scope 1, 2, and 3 emissions. That number has dipped to 9% in the 2024 survey. When it comes to reduction, 14% of companies had reported reducing their emissions in line with their ambitions over the last five years in 2023, compared to only 11% in the 2024 report.

In summary, global corporations are not showing significant year-over-year improvements in their overall decarbonization efforts. In fact, we are seeing a downward trend, significantly jeopardizing any future progress.

Brazil, India, and China leading globally in reporting and reduction

There are regional disparities in emissions reporting and it seems that countries in the Global South are taking a lead and paving the way forward. The carbon survey finds that Brazil, India, and China are leading in target setting, reporting emissions, and also reducing emissions in line with their goals. 

• Have set targets for scopes 1, 2 and 3: Companies from Brazil (25%) and India (24%) are leading the way when it comes to setting emission targets, followed by China (21%). Japan and the USA, which feature on the list of the top 5 countries, stand at 14% and 17% respectively, and have some catching up to do.
  
  
• Reporting scopes 1, 2, and 3 emissions comprehensively: 16% of Brazilian companies are reporting their emissions, compared to the 9% global average, making Brazil a leader in the space. India is a close second at 12% and China is at 10%, only marginally higher than the global average.
  
  
• Reducing in line with their targets: China, which is the top manufacturing country in the world with 31.6% of total global manufacturing output, is leading the way in reduction at 19%. The U.S.A. is close second with 18% of American companies reporting that they are reducing emissions in line with their targets.

Why are these specific countries leading?

Readers must be curious as to why Brazil, India and China are leading specifically in the context of reporting and reduction. Given the multitude of factors impacting the performance of companies from a particular region, it is too complex a question to answer with complete certainty. However, our experts believe that the following factors might be at play:

• Strong national commitments: These nations have made climate action a core part of their national strategies, aligning their policies with global targets to drive meaningful progress. For example, in September 2020, president Xi Jinping of China proposed the goal to achieve “peak carbon” emission by 2030 and become “carbon neutral” by 2060.
  
  
• Economic gains: Their decarbonization efforts are delivering significant economic returns, demonstrating that sustainable practices can lead to robust growth and competitive advantages in the global market. For example, India is significantly expanding its solar energy investments, which has attracted substantial foreign investment and have led to significant job creation in manufacturing, installation, and maintenance sectors. 

Decarbonization gives corporations competitive advantage, report finds

For a long time, climate activists have been making a moral and social argument for corporate climate action. The tide is shifting now, as businesses are discovering the competitive advantage of decarbonization at scale. 

According to the survey, 40% of respondents estimated annual financial gains worth at least $100 million for meeting emissions reduction targets, representing a 3pp increase from last year’s survey.

The primary value added from large-scale decarbonization efforts includes:

• Enhanced reputational value
• Lower operating costs, e.g. energy-efficient equipment, less corporate travel, etc.
• Greater regulatory compliance
• Higher valuations
• Increased revenues
• Improved attraction and retention of talent and investments
• Tax savings

Companies that are not making significant efforts to decarbonize are not only risking the planet but also their future competitiveness and financial sustainability.

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The promise of AI for corporate climate action

The report finds that companies that are first movers in the space and are adopting AI-powered solutions for climate action, can have a significant impact from the get-go. The survey findings emphasize the potential of AI in accelerating large-scale decarbonization, beyond the momentary hype.

Generative AI helping supercharge climate action

Generative AI is displaying significant capabilities across mitigation, adaptation, and resilience and boosting foundational capabilities in research and innovation.

• Mitigation: ​​AI-powered solutions enable precise measurement, reduction, and optimization of emissions across all industries. By analyzing complex climate data in near real-time, AI identifies and effectively mitigates emission hotspots.
• Adaptation and resilience: AI is helping build capacity at scale by preparing stakeholders to respond quickly to inevitable climate shifts by modeling possible future scenarios.
• Foundational capabilities: AI is supercharging research efforts and breakthrough innovations, by providing computational power and advanced simulation capabilities to the modification and development of climate-resilient technologies.

As elaborated in our other article, leveraging AI for corporate climate action: industry trends from BCG and CO2 AI, these three areas together position AI as a cornerstone for continuing climate action.

Calculating product-level emissions 

According to the survey, companies calculating product-level emissions are four times more likely to enjoy decarbonization benefits. Calculating the climate impact of a product throughout its life cycle, at the unit level, allows companies to:

• Visualize emissions hotspots at any level (ingredients, materials, processes, etc.) to identify concrete reduction initiatives. 
• Simulate changes to embed eco-design and decarbonize your products
• Prepare for future regulations 
• Advertise product-level sustainability.

While this sounds like a no-brainer, it is much harder to calculate product-level emissions compared to corporate-level GHG footprints. This is because, at the product level, the complexity of calculations is greater owing to the extensive supplier partnership, data processing, and analysis required.

At CO2 AI, we are helping customers compute product emissions at scale. Our customizable computation engine is helping customers allocate emissions across thousands of products. For example, Symrise, a global supplier of ingredients for fragrances, flavorings, and active ingredients for cosmetics, has been using CO2 AI to compute product carbon footprints (PCFs) from their 10,000 raw materials to 90 production sites. If you are interested in learning more, check out our guide on Scaling Product Environmental Footprints (PEFs).

The time to act was yesterday

Moving beyond the rhetoric of the ‘time to act is now’, the survey demonstrates that the time to act was yesterday. However, for companies that haven’t yet made the move, there is still time to have an impact.

The 2024 BCG x CO2 AI Carbon Survey isn't just a report, it’s a call to action. Corporate climate action can no longer be treated with complacency. Continuing on the current path risks irreversible damage to the planet and the loss of millions in business revenue due to climate catastrophes that will disrupt global supply chains.

If you would like to see CO2 AI’s robust product in action, you can request a demo and learn more about how we can help you reach Net Zero.