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Analysis

September 25, 2024

In data: The benefits of decarbonising your company

Boosting Your Bottom Line Through Decarbonisation, a new report from Boston Consulting Group and CO2 AI, reveals the business perks to be found in decarbonisation

Sadia Nowshin

4 min read

The climate crisis is worsening, with the hottest year on record in 2023. Yet corporate progress to decarbonise industry has slowed — to the detriment of the planet and profit margins, reveals a new report. 

The report, by Boston Consulting Group (BCG) and AI-powered sustainability startup CO2 AI, surveyed nearly 2,000 executives with decision-making responsibility for emissions measurement and reporting working at companies across 26 countries and in 16 major industries that are collectively responsible for around 45% of global greenhouse gas emissions. 

It found that while progress on climate issues has stagnated, with just 9% of companies surveyed comprehensively reporting Scope 1,2 and 3 emissions (compared to 10% in 2022 and 2023), significant value was unlocked by companies which did engage in decarbonisation efforts, including financial benefits equal to more than 7% of their revenues. 

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We dig into the report — and what it means for companies. 

Behind the numbers

According to the report, just 9% of companies surveyed are comprehensively reporting their climate emissions, 16% are setting comprehensive targets and only 11% have actually reduced their emissions in line with their ambitions. 

Regionally, companies from Asia-Pacific are the most prolific reporters of their emissions (with 11% comprehensively reporting), followed by Europe (at 9%), North America and South America (at 8%) and Africa and the Middle East (at 7%). 

But those low figures aren’t because CEOs are blind to the issue. 

“It's impossible not to have climate as a priority today — but it’s tough [for companies]," says Diana Dimitrova, managing director and partner at BCG X. 

Charlotte Degot, founder and CEO of CO2 AI, a software company which helps large organisations measure their impact using AI, agrees.

“We definitely see that climate is still in the top 10 risks that C-suites see — but there is a much more varied set of risks coming through,” she says. 

One priority that is taking precedence for some European companies is the knock-on effects caused by an active war in the continent, says Dimitrova: “a risk has emerged that wasn't historically there”. 

This means that more immediate and urgent problems often pop up that need to be addressed in the short-term for the survival of a company, Dimitrova adds. As a result, the longer-term concern of decarbonisation and measuring emissions is shunted down the priority list. 

Benefits of decarbonisation 

But for those who are making time to measure and reduce emissions, tangible results are evident. The report found that 25% of companies reported annual decarbonisation benefits worth at least 7% of sales, which equates to about $200m in net benefits after the cost of investments. 

These aren’t the only perks. Alongside lower operating costs and increased revenues, businesses that have made an effort to decarbonise have also benefitted from a boost in reputational value among consumers and more top talent being attracted to the company, according to the report.

Yet these in-house benefits aren’t the only emerging motivation: there is another factor that may influence companies to think more seriously about their decarbonisation efforts, say Dimitrova and Degot.

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The EU’s Corporate Sustainability Reporting Directive (CSRD) legislation requires companies to disclose their environmental and social footprints and how any ESG policies are affecting their business. It came into effect at the start of 2023, but companies have to start complying in the 2024 financial year for reports to be published next year. 

As a result, says Dimitrova, some companies are preparing for that legislation to come into effect and will be keen to find smooth solutions to help them easily measure and reduce the emissions caused by their operations. 

Introducing AI 

One way that companies can — and are — simplifying the decarbonisation effort is by making use of AI tools. BCG and CO2 AI's report found that companies using AI are 4.5 times more likely to experience significant decarbonisation benefits, including efficiency gains, than those not taking advantage of the solutions on offer. 

“AI is a massive accelerator of many foundations of decarbonisation,” says Degot. “[It can] support measurement at the right level of accuracy and regularity that helps decision making and decarbonisation.”

Dimitrova agrees that these tools are crucial if more companies are to make progress with achieving greener operations. 

“We need to create shortcuts — we’re asking folks to measure [emissions] and act very quickly, but you need tools like CO2 AI that really enable those decisions,” she says. 

“Recent progress in Generative AI now enables companies to obtain a detailed view of their emissions in weeks, vs. months previously. It’s also much more granular, with the ability to quickly process millions of rows of activity data and associate the most relevant emission factor to each individual line”, adds Degot. 

It helps companies to get started on this herculean task, says Dimitrova. “It’s about moving quickly on critical metrics and trends, to set reductions in motion. Companies need to use all the tools at their disposal.”

Sadia Nowshin

Sadia Nowshin is a reporter at Sifted covering foodtech, biotech and startup life. Follow her on X and LinkedIn