Guide for CEOs published by World Economic Forum and Boston Consulting Group argues that corporate climate action motivated by competition is critical to delivering climate goals
Companies that “move first” in pursuit of decarbonisation are set to have an outsized impact on global climate efforts, while reaping a host of business advantages, according to a report published this week by the World Economic Forum in collaboration with Boston Consulting Group (BCG).
Dubbed Winning the Race to Net Zero: The CEO Guide to Climate Advantage, the report argues major progress on decarbonisation in recent years has often been the result of competitive action triggered by a single company – for instance, Tesla in the automotive market.
These early movers raise the bar for their industries, shift consumer expectations, reshape the market context, and prove that emission reduction is an economic proposition, the report notes.
“One of the most common narratives around corporate climate action is the collective action paradigm “no company can do it alone”,” the report notes. “Solving the climate crisis certainly requires everyone to move. Yet major progress in recent years has often come not from collective action but from competitive action, triggered by one individual company boldly moving ahead of its sector.
“Early movers can not only create value – they can change the game by prompting the systemic changes across sectors and the regulation needed to achieve the climate imperative.”
Based on interviews with nearly two dozen CEOs and senior executives and analysis of data from various sources, including the Science-Based Targets initiative (SBTi) and CDP, the report also notes that companies that “lead on change” tend to attract more talent, achieve higher shareholder value, access cheaper financing, and play in higher-growth segments.
Patrick Herhold, managing director and partner at BCG’s centre for climate and sustainability, said the transition to clean technologies and low carbon business models was happening faster than most companies realised. “Companies that underestimate the pace and magnitude of changes like these are at risk of grossly misjudging the impact that climate transformation can have on business models, products, and company value,” he warned.
The report also estimates that all companies can achieve at least a third of required emission reductions at no cost to their business, with some companies could almost fully decarbonise at no net cost.