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Grow your business while cutting emissions. Why some industries can and others fall short

Consumer demand and interest rates are among the factors that may account for the variation. Read More

(Updated on January 24, 2025)
Automakers are among the transport industry that has had success growing business while cutting emissions. Source: Shuttertstock/IM Imagery

Business sectors vary significantly in their ability to balance growth with emissions cuts, data from sustainability disclosure organization CDP reveals. 

The transport, apparel and service industries achieved results that read like an advertisement for sustainability ambition: companies in those sectors on track to hit emissions targets outperformed rivals that look likely to miss their goals. But the reverse was true for the fossil fuel, power generation and materials sectors, where performance on emissions correlated with lackluster financial results.

The data come from disclosures made to CDP by more than 6,800 companies in multiple countries, analyzed with input from collaborators at the World Economic Forum and sustainability consultants Oliver Wyman. 

Stark differences

Averaged across all sectors, the numbers show no penalty or gains associated with hitting or missing emissions targets: the average growth in market capitalization since 2022 of companies in both groups was 10 percent. But stark differences emerged at the level of business sector. Materials companies on track to hit emissions targets grew by an average of just 3 percent, a quarter of the figure achieved by those off target. One of the largest divergences in the other direction was in transport, where those on track grew by 13 percent, almost double the rate of those off track.

One explanation for the results for transport, the report authors noted, are government subsidies for electric vehicles, which have rewarded companies that both produce the vehicles and are leaders on climate. In apparel, consumers are increasingly demanding more climate-friendly clothing, which has positioned more sustainable brands for success, said Nicolette Bartlett, CDP’s chief impact officer.

‘Fossil fuels winning’

At the other end of the chart, high inflation and interest rates have stymied power generation companies, which need to raise large amounts of capital for renewable energy projects. “Fossil fuel starts winning in that environment,” said Bartlett. Because many are not consumer-facing, companies in power generation, fossil fuels and materials are also unable to capitalize on consumer demand for sustainable products.

The report, the CDP 2025 Corporate Health Check, is the first in what Bartlett said is intended to be an annual series. Other notable results include findings that:

  • Corporate transparency is strongly linked to action on climate and nature: In recent years, companies disclosing through CDP have cut emissions by an average of 2 percent annually, even as global emissions rose 1 percent annually. 
  • A little over one in three companies are on track to meet their emissions reduction targets. Europe has the highest proportion, with 46 percent of companies on track, followed by Asia and North America with 33 percent.
  • Close to eight in 10 companies with the highest health check scores linked executive pay to climate targets, compared to around half of those with the lowest scores.

Tracking progress toward climate goals is challenging and the CDP’s report is a welcome contribution, said Marty Spitzer, senior director, climate and renewable energy at the WWF. He noted that the brevity of the report and lack of detail on methodology and data made it difficult to assess the conclusions. “We nevertheless agree with the general point that some companies are struggling to meet their voluntary goals, especially scope 3 goals up and down their value chain,” Spitzer added. “With little direct control over these emissions and the overall economy not decarbonizing anywhere close to a 1.5 degree [Celsius] trajectory, we need increased incentives for companies to invest in their value chains and carbon removals and ensure those investments have the intended impacts.”

UPDATED: This story was updated to include comment from WWF.

[Get the latest insights on carbon markets, disclosure, nature and more at GreenBiz 25 — our premier sustainability event, Feb. 10-12, Phoenix.]

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