Companies have not made much progress in comprehensively measuring and reducing their emissions over the past year, according to a new study by CO2 AI and Boston Consulting Group (BCG) being released ahead of COP28, which begins at the end of the month.
Titled Why Some Companies Are Ahead in the Race to Net Zero, the study builds on CO2 AI and BCG’s 2021 and 2022 investigations into the progress that businesses around the world have made on emissions measurement and reduction. CO2 AI and BCG surveyed 1,850 executives responsible for emissions measurement, reporting, and reduction in their organizations across 18 major industries and 23 countries.
According to the survey, just 10% of companies now report comprehensively measuring all their emissions, revealing no improvement relative to the 2022 survey.
What is more concerning, only 14% of companies report reducing emissions in line with their ambitions over the past five years, down 3 pp from 2022.
Macroeconomic conditions and capital constraints are the main challenges cited by the respondents when it comes to reducing their company’s greenhouse gas (GHG).
Despite these discouraging results at a global level, there are bright spots to highlight. On Scope 3, for example, companies have taken steps to significantly improve the coverage of their emissions measurement and reporting.
These emissions are on average 11.4 times higher than operational emissions (Scopes 1 and 2). Hence, the reported increase in Scope 3 measurement and reporting is encouraging, as increased collaboration along the supply chain is essential to attaining net zero.
In tandem, more respondents said they have set Scope 3 reduction targets—up 12pp since 2021, from 23% to 35%—with the most common areas of focus being waste management and purchased goods and services.
Harnessing the power of digital technology in the emissions-management process
30% of companies plan to expand the deployment of AI-powered tools within the next three years to improve accuracy, efficiency, and decision-making in emissions management.
Companies with automated digital solutions for measurement of emission are 2.5 times more likely to measure their emissions comprehensively.
The good news gleaned from the report is that businesses that have made decarbonization progress are realizing both financial and non-financial benefits to their business, citing reputational value, lower operating costs, and regulatory compliance among the top benefits thereby gaining a competitive edge over their peers.
In addition, 40% of respondents estimate an annual financial benefit of at least $100 million from meeting emissions reduction targets
