Achieving $200 Million In Annual Gains: The Financial Impact Of Decarbonization – Report

Despite the worsening climate crisis and 2023 being the hottest year on record, corporate progress on decarbonization has slowed. A recent survey found that many companies made little progress on climate issues over the past year. However, some climate leaders have achieved significant financial benefits from their decarbonization efforts, with gains amounting to more than 7% of their revenues, translating to an average of $200 million per year. These companies have moved beyond basic actions, such as measuring and reporting emissions, and are taking more advanced steps, like using AI and calculating emissions at the product level to support their decarbonization goals.

The BCG + CO2 AI Carbon Emissions Survey for 2024 involved polling executives from businesses responsible for about 45% of global greenhouse gas emissions. The survey has tracked progress on emissions measurement and reduction since 2021. Of the nearly 2,000 companies surveyed in 2024, only 9% reported their Scope 1, 2, and 3 emissions comprehensively, 16% had set targets across all three scopes, and just 11% reported emissions reductions in line with their goals. These numbers are lower than those in the 2023 survey.

Despite this overall slowdown, there are positive examples. Companies in Brazil, India, and China lead in comprehensive emissions reporting, target setting, and achieving reductions. A quarter of the businesses surveyed reported substantial financial benefits from decarbonization, with reduced operating costs being a major source of these gains. These savings often come from efficiency improvements, waste reduction, the optimization of materials or operational footprints, and the use of renewable energy.

More than half of the companies surveyed believe they can reduce emissions by 10% to 40% while saving costs. For example, Reckitt, a multinational consumer goods company, reduced its Scope 3 emissions for its Air Wick brand through product innovation. By focusing on transportation, manufacturing, and raw materials, the company cut emissions while enhancing the sustainability of its products.

Countries that excel in measurement, reporting, and target setting have seen the most benefits from decarbonization, particularly those following a 1.5°C pathway. These efforts have the potential for significant global impact if more businesses follow suit. The survey highlights the importance of foundational actions like emissions measurement, reporting, and target setting. Companies that take these steps comprehensively are more likely to experience significant decarbonization benefits.

Advanced actions, often driven by technology investments, are also key to maximizing emissions reductions and financial rewards. Companies using AI to reduce emissions are much more likely to see significant benefits. For instance, one global food company used AI to manage its Scope 3 emissions, which account for 98% of its carbon footprint, by automating its emissions measurement process and increasing accuracy.

Calculating emissions at the product level is another advanced action that helps companies improve sustainability and prepare for future regulations. Symrise, a global supplier of ingredients for fragrances and cosmetics, has started calculating product carbon footprints for a large part of its portfolio. This allows them to meet various sustainability standards and enhance their sustainability initiatives.

Finally, companies that adopt climate transition plans are more likely to experience decarbonization benefits and align their emissions reductions with a 1.5°C pathway. These plans show a commitment to sustainability, helping companies achieve their climate goals and capture significant benefits from their decarbonization efforts.