Optera Analysis: Trends in Corporate Climate Action

In the lead up to the World Economic Forum’s fall climate summits, the Forum commissioned Optera (formerly POINT380) to analyze the progress made by corporations…

In the lead up to the World Economic Forum’s fall climate summits, the Forum commissioned Optera (formerly POINT380) to analyze the progress made by corporations in adopting and achieving emissions reduction goals. Below are the key findings from the analysis, which utilized data from CDP and the Science-Based Targets initiative (SBTi).[1]

1.5C and Net Zero targets are the new standard for corporations

Since 2018, the number of reported corporate emissions reduction targets has increased 70 percent. This increase has largely been driven by ambitious targets that are aligned with climate science. Data from SBTi shows that in 2020 alone, adoption of corporate targets aligned with a 1.5-degree ambition outpaced two to one those targets aligned with a lesser 2-degree ambition. Regarding the most ambitious climate commitments, the number of corporate net zero goals (a complete zeroing out of operational emissions by 2050), has nearly doubled since 2015. Still, approximately 60 percent of reported science-based targets align with the Paris Agreement’s 2-degree scenario, which has since been recognized as insufficient to avoid the worst impacts of climate change.

As of August 2020, 39 percent of reported science-based targets align with 1.5 degrees or go beyond this ambition to seek a complete zeroing out of operational emissions before 2050.

Companies are buying renewable energy and offsets to help achieve their goals

For most companies, achieving ambitious emissions reduction targets will require going beyond efficiency measures alone. In 2018, the average company sourced 18 percent of its energy from renewable sources—a move largely made possible by significant investments from the Utilities sector to increase renewable energy as a share of total electricity generation. By comparison to renewable energy purchases, a much smaller proportion of companies reported purchasing carbon offsets in 2018. In terms of emissions impact, more than half of these offsets were purchased by the Utilities and Materials sectors.

Supply chain management is driving growth and scale in corporate sustainability

With operational emissions management now seen as standard in the corporate sector, companies are expanding their climate programs to capture emissions across their value chains. The number of companies with a Scope 3 emissions reduction target increased nearly 50 percent since 2018, with companies in the Industrials, Consumer Discretionary and Financial sectors leading the way. This shift toward Scope 3 management, and specifically supply chain management, has driven disclosure among suppliers. Since 2016, participation in CDP’s Supply Chain Program has grown by approximately 30 percent for member companies, and by more than 50 percent for suppliers.

Leading companies are going beyond disclosure to set requirements and enable their suppliers to achieve significant emissions reductions. By establishing target and performance standards for their suppliers, these leading companies can reduce emissions by orders of magnitude greater than they could if they focused solely on their internal operations.

[1] Data sources include CDP2016 – CDP2019 Climate Change Questionnaire, and Science Based Targets Initiative “Companies Taking Action” list as of September 2020.

Back to all posts Next

Sign up to stay up to date with Optera and the latest developments in corporate sustainability.