Carbonsink - Italian business needs to accelerate climate action today

In recent years Italian companies have made significant steps forward on climate. Integrating climate action into business strategies went from being a niche approach to becoming a mainstream criteria for all companies who are simply willing to exist in an increasingly climate aware world. Despite this, new data recently released by Carbonsink in collaboration with Borsa Italiana highlights how Italian top companies are still unprepared to meet the climate challenge. The Net Zero Readiness Index 2022 assesses the top 100 companies by capitalisation listed in the Ftse Mib and Ftse Italia Mid Cap indices against the level of preparation needed to support a decarbonisation journey in line with Paris Agreement climate objectives. The study evaluates as ‘sufficiently prepared’ only 16 companies out of the 100 analysed. Despite looking worrying, this figure should be interpreted as a call to action and a reminder that Italian corporations still have plenty of room for improvement.

Reducing the private sector’s environmental impact is crucial and needs to be done proactively, appropriately and transparently - gone are the days where businesses could get away with unsubstantiated sustainability claims. Measuring all emissions, defining science-based and ambitious reduction plans and offsetting residual emissions through certified carbon credits are tangible actions Italian businesses can do today to minimise their impact on climate. Such initiatives are not to be taken lightly, and need to be integrated into a solid climate strategy to reach long-term impact, both in terms of business growth and competitiveness, and of climate change mitigation. This may sound trivial, but it is not.

The Net Zero Readiness Index shows that only 26 companies out of the 100 analysed account for relevant categories of indirect emissions generated along the supply chain (Scope 3). Often accounting for the majority of a company's carbon footprint, indirect emissions are key to understanding a company’s real carbon footprint, which is in turn necessary to define appropriate and ambitious reduction targets and plans, which also need to be science-based. As of today only 42 Italian companies have had a reduction target approved by the Science-Based Target initiative, which is less than half of those who have in Germany (103) and France (96).

Being prepared for the climate challenge also means offsetting emissions that cannot be avoided. This can be done by purchasing certified carbon credits, yet the vast majority of top Italian companies do not offset their emissions yet. Global carbon markets are expanding and carbon credit prices are rising due to heavy demand. Carbon credits provide the Italian private sector with the opportunity to capitalise on climate finance by complying to increasingly stringent scrutiny, as well as channelling much needed investment into mitigation projects. Investing in certified projects that tackle climate change, protect natural ecosystems, and support sustainable development benefits local communities as well as society at large, for we have one planet and one atmosphere only. Extending corporate climate action beyond the corporate value chain is therefore the next logical step to ensure long-term and sustainable impact. Certified carbon credits help companies do just that.

In a world where corporate sustainability claims are sharply on the rise, just like greenwashing accusations and legal actions are, we need to steer away from simplistic takes on the matter. Approaching stakeholders with transparency and accuracy when communicating their climate journey is becoming increasingly important for companies that wish to keep their reputation intact, strengthen their brand positioning and differentiate themselves from less responsible competitors.

In the coming years, the focus on corporate climate action integrity and accountability will continue to grow. Businesses, from large multinationals to PMIs, know it, and feel the regulatory and market pressure pushing them towards the adoption of more sustainable practices. Italian companies have the chance to solidify their reputation in the eyes of national and international stakeholders, entering a scenario where climate risk is growing, and being prepared for it feels more and more strategic by the day.

It is the sole responsibility of the Sustainable Finance Partner to check the truthfulness, accuracy and completeness of the data and information entered on this web page, when within its competence and provided by the Partner. Borsa Italiana S.p.A. is not responsible for the contents developed by third parties and in particular by the Sustainable Finance Partners contained in this web page.