Carbonsink - A deep dive into the global state of corporate climate action

Globally more and more companies are setting net zero targets than ever before and three quarters of companies with a senior sustainability executive are increasing their budgets to reach net zero.

The newly released South Pole Destination Zero Report highlights that corporate climate action is maturing across the world, with climate conscious companies leading the way, whilst everyday companies need to go further and faster.

This year's report surveyed over 1,400 climate-conscious companies with dedicated sustainability leads, across 12 countries and 14 sectors, and compared the findings with a broader set of data (South Pole’s proprietary database of 77,000 companies), aiming to capture the global state of corporate climate action and in particular how companies are progressing towards net zero. The report confirms, for the first time, that the trend of ‘greenhushing’ is present across nearly every major sector around the world. This means companies are voluntarily reducing public communications about the climate action they are taking, despite generally understanding that communicating their climate commitments and achievements is good for their business. Lack of clarity and changing regulation is cited as one of the main reasons.

Looking at the Italian context, Carbonsink - part of South Pole since 2022 - notes that climate action is increasingly becoming a key priority at management level. In the past few years, the increasing commitment to climate-related issues at c-level and active engagement of leadership has become a powerful driver for private sector action, with deep decarbonisation, net-zero strategy and climate risk and opportunities finally climbing towards the top of CEOs agendas.

While this trend is positive, there is still a gap between corporate ambition and implementation, especially if we broaden our gaze beyond industry leaders to everyday companies still struggling to measure Scope 3 emissions and to assess climate risks. One of the main challenges identified is that companies often lag behind in the development of a comprehensive Climate Transition Plan, a key strategic tool to align company assets, operations and business model towards a trajectory in line with climate science. On the other hand, incoming regulations, such as the EU's Corporate Sustainability Reporting Initiative (CSRD), will push companies to accelerate action to address the urgency of the climate crisis, requiring them to demonstrate adequate carbon accounting, target setting and climate risk assessment systems.

Customer and stakeholder demand continues to rank as top climate action driver. A new generation of consumers expect companies to not only to reduce their environmental footprint but, in parallel, to actively contribute to the safeguarding of ecosystems. Interestingly, whilst investors have undoubtedly been a driving force in net zero targets being set, the report shows that when the time comes to vote on operationalising them investors are adopting a ‘wait and see’ approach. Climate timelines do not follow ROI timelines and with 2030 climate milestones fast approaching, the financial power investors yield is crucial and could make all the difference.

Corporate climate action will remain a complex space, with new data, regulation and challenges constantly emerging. Given the climate challenge we are facing, it’s the committed corporate climate leaders’ job to pave the way down which everyday companies will eventually be pushed by regulators, anticipating upcoming policies, responding to market demand and making a difference for climate.