What's Happening?
A recent report by EY has revealed that only two-thirds of businesses have a climate action plan, underscoring the need for stronger business cases for sustainability and decarbonization. The report emphasizes the importance of creating a business case for net-zero emissions, particularly in addressing Scope 3 emissions, which account for a significant portion of a company's carbon footprint. The lack of comprehensive climate reporting data and the high costs associated with emissions reduction pose challenges for businesses. The report suggests that linking decarbonization efforts to financial value can help overcome these challenges and drive momentum for climate action.
Why It's Important?
The findings of the EY report highlight a critical gap in corporate sustainability
practices, which could have significant implications for businesses and the broader economy. Companies that fail to develop robust climate action plans may face increased financial, reputational, and regulatory risks. As expectations for low-carbon performance rise among stakeholders, businesses that can demonstrate tangible progress in sustainability are better positioned to maintain trust and secure new opportunities. The report suggests that inaction on climate change could lead to a 15% reduction in annual revenue, emphasizing the financial stakes involved.
What's Next?
To address these challenges, businesses are encouraged to develop comprehensive decarbonization strategies that include clear implementation plans and stakeholder engagement. This involves improving data integrity, enhancing supplier performance, and integrating sustainability efforts across business functions. By prioritizing action over perfection, companies can build momentum and strengthen their capabilities in sustainability. The report also highlights the need for businesses to quantify the financial benefits of decarbonization to make a compelling case for climate action.
