Finance & Investment

Corporate Giants See $5T Benefit in Climate Action, Doubling Previous Estimates

The financial benefits of climate-related opportunities seen by the world’s largest companies have more than doubled in the past 5 years; they identify an average of over $3B each.

Published 1 month ago | About a 5 minute read

Image: Baku, Azerbaijan | Sevil Yeva

Companies see more business opportunities from tackling climate change than ever before, with the world's biggest businesses now identifying nearly $5 trillion in potential gains — according to data released by CDP, as governments convene this week in Azerbaijan for COP29.

Expectations have increased substantially, with the world’s largest 500 businesses raising the potential financial benefits they see from $2.1 trillion in 2018 to $4.8 trillion in 2023 — more than doubling (127 percent) in the past six years.

The analysis comes from CDP — the non-profit that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts — based on listed companies representing over two-thirds of global stock market value and thousands of private companies.[1]

From the wider group of all disclosing companies, opportunities totaling $16 trillion were identified last year — a figure equivalent financially to the combined GDP of Germany, India and Japan.

On a per-company basis, the average financial amount identified stands at $3.1 billion — with the most impactful opportunities related to shifting products and services, attracting new markets, and building climate resilience.

“Companies increasingly see tackling climate change as an investment in the future — and that's how governments need to start seeing their NDCs ahead of next year," said CDP CEP Sherry Madera. “This analysis shows there are trillions in opportunities across the global economy. Business now needs governments to lay out plans with sufficient detail for the market to act, realize these gains and kickstart green growth. With the focus of COP29 negotiations on finance, we believe the only route to success is seeing ambitious business practice and the 1.5°C goal working hand in hand.”

Ambition vs progress

Despite the recognized lucrative opportunities, corporate progress to align core business activities with climate goals is falling far short of what is needed: According to the MSCI Sustainability Institute’s latest Net-Zero Tracker, the scope and pace of the decarbonization efforts of listed companies across 16 nations could only deliver an emissions-reduction trajectory tied to a 2.8°C scenario — massively overshooting the 1.5°C limit necessary to ensure a livable future.

CDP’s analysis reveals just 16 percent of companies generate the majority of their revenue from low-carbon products, while the average reported share of investment (CapEx) spent to deliver corporate climate-transition plans stood at just 25 percent.

The data also show that companies are struggling to seize the projected opportunities by adapting their product and service portfolios — suggesting that stronger NDCs and policy frameworks are needed to help mobilize private capital.

Failure to do so increases the prospect of significant business risks, but CDP data show signs of hope — among the global 500 companies, awareness of the financial impact of climate risks has improved: The companies analyzed identified over $1.3 trillion in climate-related risks — a 29 percent increase from 2018 — with regulation, market impacts and acute physical risks the top concerns.

Transparency regarding corporate climate ambition vs progress is a critical input into this year’s COP negotiations to help governments set and deliver targets that take a whole-of-economy approach. In a boost to the availability of standardized environmental data to guide governments, the number of companies reporting environmental data through CDP grew to over 24,800 companies (+7 percent) in 2024 — including those representing over 66 percent of total global stock market value. The data disclosed through CDP's new questionnaire is aligned with IFRS S2, the ISSB's climate standard, as the foundational baseline for CDP's climate disclosure.

In addition to the corporate giants, over 12,500 small and medium enterprises (SMEs) reported through CDP’s new SME-specific questionnaire — with over 15,000 also disclosing nature data. This is a crucial development and a positive sign that companies are moving beyond ‘carbon tunnel vision’ in their climate-action strategies — mitigating and adapting to climate change will take more than simply cutting greenhouse gas emissions; protecting and enhancing biodiversity is also critical.

“It is highly encouraging to see that more than 12,500 SMEs reported through CDP's new SME questionnaire in this first year,” said Nigar Arpadarai, UN Climate Change High-Level Champion. “Disclosure is a crucial first step to action and will be essential to future-proofing SMEs and supply chains across major and emerging markets. CDP has been a great partner in my campaign to empower thousands of small businesses to thrive in the green transition — helping SMEs to surface information that will make it easier to understand where to focus their attention, build capacity and act.”

Since host country Azerbaijan kicked off proceedings by declaring its intention to expand its fossil fuel production by up to a third over the next decade, the likelihood of COP29 yielding any meaningful climate-action agreements or financial commitments from the 200 countries in attendance is slim — which means, as always, it’s up to the business world to drive the innovation and systems change needed to keep itself, and the planet, in business for the long term.

[1]The analysis is based on 316 companies from a global 500 sample of the world’s largest companies by market capitalization disclosing to CDP in 2018 and 344 companies disclosing to CDP in 2023.