Finance & Investment

Study:
Decarbonization Efforts Bring Companies $200M in Annual Net Benefits

BCG and CO2 AI’s 4th Carbon Emissions Survey highlights the substantial rewards some companies are reaping from decarbonization — including significant financial gains, enhanced reputations and operational efficiencies.

Published 6 months ago | About a 4 minute read

Image: Joe Plenio

Despite the escalating climate crisis and 2023 marking the hottest year on record, corporate progress on decarbonization has slowed around the world. A new study released Tuesday by Boston Consulting Group (BCG) and CO2 AI reveals that companies have made minimal progress on climate issues over the past year — yet, those at the forefront report substantial financial benefits from decarbonization.

The fourth edition of the companies’ fourth annual Carbon Emissions Survey — detailed in the report, Boosting Your Bottom Line Through Decarbonization — polled 1,864 executives overseeing 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 percent 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.

Climate progress stalls

The survey builds on BCG and CO2 AI’s 2021, 2022 and 2023 investigations into the progress that companies have made on emissions management and reduction, and the actions they are taking to decelerate climate change. Among the nearly 2,000 companies surveyed in 2024, only 9 percent described comprehensive reporting of Scopes 1, 2 and 3 emissions. Just 16 percent have set targets across all three scopes; and only 11 percent have achieved emissions reductions in line with their ambitions. These figures are all lower than those reported by companies in 2023.

Substantial financial benefits from decarbonization

Nonetheless, there are bright spots. Companies in Brazil, China and India are leading the way in comprehensive emissions reporting, target setting, and achieving emissions reductions in line with their goals.

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And even as overall progress has seemed to slow, 25 percent of the businesses surveyed reported annual decarbonization benefits equal to more than 7 percent of their revenues for an average net benefit of $200 million a year. One of the leading benefits was a reduction in operating costs — often resulting from initiatives that boost 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 that they believe their emissions can be reduced by 10-40 percent, at a net cost savings. Consumer goods giant Reckitt did so through product innovation: One initiative 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. As David Croft, Reckitt’s group head of sustainability, asserts in the report: “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.”

“This year's survey highlights the substantial rewards some companies are reaping from decarbonization — including significant financial gains, enhanced reputations and operational efficiencies,” said Hubertus Meinecke, BCG’s global leader of climate and sustainability and a coauthor of the study.

Decarbonization efforts that reduce operating costs build on a similar win-win of climate action highlighted in another recent study — which found that companies proactively working to reduce their carbon footprint and transparently share their environmental strategies and data also benefit from lower costs of capital, by increasing investor trust.

Steps to unlocking value

The report highlights three foundational actions as the initial steps in a company’s decarbonization journey; optimizing them often leads to decarbonization excellence 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.

Beyond foundational steps, companies can increase emissions reductions and potential rewards through advanced actions. The survey suggests several tech-enabled actions that boost accuracy, impact and value capture:

AI usage. Companies using AI to reduce emissions — in ways that account for the technology’s own impacts — are 4.5 times more likely to see significant decarbonization benefits.
Product-level emissions. Companies that calculate product-level emissions are four times more likely to experience significant decarbonization benefits.
Climate transition plans. Companies that adopt a climate transition plan are 2.9 times more likely to experience significant decarbonization benefits and 3.3 times more likely to reduce emissions in accordance with a 1.5°C pathway.