More than 30% of business leaders across sectors say their company will still be reliant on fossil fuels into the 2050s, despite many having set net zero targets well ahead of this date. And while pressures from consumers and investors have played a visible role in progress toward decarbonisation, more than 70% of businesses say government regulation is the most important driver for accelerating the energy transition. These are among the findings of the Corporate Climate Stocktake (CCST), the most ambitious, forward-looking review to date of private sector progress, obstacles, and opportunities for achieving net zero, released by the We Mean Business Coalition (WMBC) with support from the Climate Champions Team and Bain & Company.
This wide-reaching perspective includes input from more than 300 of the world’s largest emitters and a data-based analysis of eight key transition sectors: power, road transport, concrete and cement, steel, shipping, agriculture, aviation, and hydrogen. Together these sectors account for two-thirds of global greenhouse gas emissions. To complement the broad focus of the UN’s Global Stocktake, the Corporate Climate Stocktake captures evidence from business leaders at the forefront of their industries to understand the pace of change in each sector, the barriers they are facing, and what the most ambitious companies need from governments to go faster.
While the Global Stocktake has shown nation-states are falling short of their climate goals, the CCST finds the pace at which clean energy technologies are being developed and deployed continues to exceed expectations. “Policymakers will meet at COP28 to review the Global Stocktake established under the Paris Agreement,” said Maria Mendiluce, CEO of We Mean Business Coalition. “Good progress has taken place in the greening and electrification of energy uses.
However, much more is needed to tackle sectoral and systemic interventions, especially in hard-to-abate sectors. The CCST offers a ground-breaking and frank snapshot of how business is driving forward climate action and the issues that hold them back. ” “When I meet with business leaders, I hear their desire to accelerate adoption of clean energy and technologies and a frustration that more is not being done to remove the barriers to scaling up clean solutions in their sectors and value chains,” Mendiluce said.
“The CCST captures evidence from business leaders at the forefront of driving change in their industries: to understand the pace of change in each sector, the barriers they are facing, and what our most ambitious companies need from governments to go faster. Now we need to use these insights to shape policies that support businesses and sectors to reach net zero at the pace required by science. ” “Thanks to the Paris Agreement, more than 90% of the world’s economic output is covered by some form of net zero target, and governments around the world are pursuing policies to reduce fossil fuel usage, but is it enough?” said Katherine Dixon, a partner at Bain & Company.
“Unfortunately, evidence shows it is not. Our research shows that it’s not just emissions targets, but the interplay of business innovation, industrial policy, and availability of capital that will determine the shape of our energy future. As we head into COP28, we need to be asking ourselves whether we are organized effectively to increase the dynamic efficiency of transitions.
Sectoral approaches, like the ones we have laid out in this stocktake, will be central to our collective success. ” Across all eight sectors analysed, the evidence from business leaders and industry experts is striking. The rates of adoption of clean technologies are increasing, while costs are falling as businesses invest in bringing new technologies down learning curves and up deployment curves.
Yet in every sector, business leaders point to a range of transition barriers holding them back, from the availability of infrastructure to the realities of commercial incentives. Key sectoral findings include: Hydrogen: Hydrogen plays a crucial role in the decarbonization of several industries, including steel, shipping, and freight. Over 40 countries have announced hydrogen strategies, aiming to create end-market demand as well as assisting producers in accelerating deployment of key technologies and supporting the expansion of physical transport, storage, and distribution infrastructure.
The CCST shows production costs for green hydrogen decreased by approximately 65% between 2010 and 2022, and the industry anticipates costs will fall by another 45% by 2030, driving capital expenditure down by 60%. Clean hydrogen projects in the pipeline suggest that more than 90% of global low-carbon hydrogen capacity will be green hydrogen by 2030. But the scale-up of electrolyzer capacity faces constraints from potential restrictions and shortages of key materials and competition for renewable electricity supply in some places.
Sustained government intervention will be critical to develop the market. Power: Four major economies China, US, EU, and India set the pace of global power decarbonization, with 61% of global power generation. In total, clean electricity represents about 27% of global generation.
But it’s growing rapidly, with investment in renewables outstripping fossil fuel generation. The CCST shows investment in renewable power has soared as capital costs for solar decreased by 85% in a decade, plummeting from $5,500/KW in 2010 to $830/KW by 2021. Yet emissions continue to rise as new coal capacity is added.
The power industry also faces workforce challenges just 30% of industry leaders surveyed believe they have the workforce needed to meet their goals. Reskilling will be crucial for enabling system operators to build confidence in integrating greater levels of variable generation into traditional thermal power system. Steel: In steel, zero-carbon technology has achieved commercial scale, but costs are 20% higher than conventional methods.
The CCST shows businesses do not anticipate cost parity with traditional blast furnace production any time soon, complicating large-scale deployment in this globally competitive sector, particularly as most new capacity is anticipated in emerging markets. Leaders in the steel sector identify availability of inputs as the primary barrier to decarbonizing along with technical feasibility, commercial viability, and infrastructure. But with blast furnace technology still set to dominate future production, coordinated international action will be required to enable the build out of new low carbon steel capacity at scale or the abatement of legacy technology.
Aviation: Sustainable aviation fuel (SAF) is the only near-term solution to decarbonize aviation, and aircraft manufacturers are planning to make engines 100%-SAF ready as soon as 2030. A further ramp up in low carbon fuels will be needed to hit aspired 2030 production levels. But established biofuel technology faces feedstock constraints, and significant investment will be required to ensure alternative emergent technologies reach maturity.
Road transport: Global passenger EV sales grew four times from 2020-2023, and dramatic decreases in the costs of lithium-ion batteries have enabled the electrification of transport, decreasing by 25% from 2013 to 2022. Continued reductions in battery cost should drive purchase price parity with internal combustion engine (ICE) vehicles in the next couple of years. But it’s the lag in charging infrastructure investment that remains the biggest barrier and prevents faster consumer uptake.
Governments need more focused strategies to overcome this, including through public-private partnerships. Cement: In cement, the road to full decarbonization is dependent on the availability of low carbon clinker substitutes. Blast furnace slag and fly ash are well known substitutes; however, their future availability might become limited in certain geographies where steel and coal production decarbonize.
Producers must find a way to make alternatives commercially viable. Leading cement manufacturers have become material science laboratories, building multi-million-dollar facilities dedicated to production of alternative cement and concrete mixes. These mixes use novel supplementary cementitious materials (SCMs) with the goal of reducing emissions intensity of cement and concrete production by about 50%.
Shipping: Evidence from the CCST shows less than 40% of ship operators anticipate retiring ships in favor of low-emission vessels prior to 20 years of service. This makes near term action to fully implement operational efficiencies critical. Ship operators have demonstrated significant adoption of near-term operational efficiency practices, but there is more work to do, and international standards can play a key role.
The lack of infrastructure to support fuel production and bunkering is among the top concerns of business leaders. Agriculture: The food system accounts for 25-35% of global emissions and is set to rise as the global population grows. The agriculture sector illustrates how some currently adopted business models make transition to net-zero products and services challenging.
For example, while peak deforestation may be behind us, demand and prices for beef, palm oil, and soy continue to rise, representing powerful economic drivers for land use change. Without greater incentives for landowners and farmers to preserve or reforest lands, the business case remains challenging. Nearly a decade on from the Paris agreement, the CCST calls on governments to recognize the inadequacy of existing international mechanisms and institutions for driving the global energy transition.
It encourages major economies to focus on strengthening the multilateral coordination of industrial policy, with sectoral strategies as the central organizing principle for climate action. To support this effort and underscore the synthesis report published today, WMBC will be publishing deep dive analyses for each sector in the weeks leading up to COP28 with support from Bain & Company and the UN Climate Champions team. About We Mean Business Coalition We Mean Business Coalition works with the world’s most influential businesses to take action on climate change.
The Coalition is a group of seven nonprofit organizations: BSR, CDP, Ceres, Climate Group, CLG Europe, The B Team and WBCSD. Together, we catalyse business and policy action to halve emissions by 2030 and accelerate an inclusive transition to a net-zero economy. Find out more at wemeanbusinesscoalition.
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