In the race to net zero, companies across various industries that are making progress in emissions reductions could yield more than $100 million in annual financial benefits, according to a recent report by Boston Consulting Group (BCG) and CO2 AI. The report – Why Some Companies are Ahead in the Race to Net Zero – explores how deploying net-zero strategies can represent a positive business case for some companies.
According to Diana Dimitrova, BCG’s Climate Expert, companies that have reaped the benefits of emission reduction strategies tend to have implemented four practices.
These include collaboration across the entire supply chain; the assessment of emissions at the product level; the utilization of digital technology solutions; and the recognition of regulation as a catalyst for both growth and business success.
The report showed that among the 1,850 companies surveyed across 83 countries and 18 different industries, little to zero progress has been made in the comprehensive measurement and reduction of emissions in the past year. While Scope 1 emissions – direct emissions from company-owned and controlled resources – showed no change, progress has been recorded across Scope 2 and Scope 3 figures – indirect emissions from the generation of purchased energy and from the value chain, respectively. Notably, Africa and the Middle East have shown progress in this area, with both regions showing an improvement in measuring emissions.
“We are starting to see that for Scope 1, the measurement is roughly the same across the years. But for Scope 2, which is purchased energy, we are seeing an improvement. So, companies are focusing on where they get their energy from. For Scope 3, we are seeing a 19-percentage point increase. Not only are companies measuring Scope 3, but they are actually setting targets for Scope 3,” stated Dimitrova.
Given the complexity of measuring Scope 3 emissions, the findings show hope for meeting global climate targets. That said, companies continue to face challenges with regards to measuring emissions. According to Charlotte Degot, Founder and CEO of CO2 AI: “The first is macroeconomic challenges, which make it hard to focus on long-term priorities [and] the second is capital constraints.” The final obstacle is that the technology used in emissions abatement is still relatively new, featuring high-cost and slow deployment.
Looking ahead, Hubertus Meinecke, BCG’s Climate & Sustainability Leader, believes that AI will play a key role in not only addressing these challenges, but also supporting companies to measure, and therefore reduce, their carbon emissions.
“AI is expected to play a more prominent role in emission management. Thirty percent of respondents plan to expand the deployment of AI-powered tools in the next three years across a variety of functions,” he notes.