Reducing greenhouse gas emissions has become an increasingly cost-effective strategy for businesses across various sectors. For decades, companies have been implementing process improvements leading to greater efficiencies and adopting simple measures like switching to energy-efficient LED lighting or buying renewable energy. As companies gain more experience with these technologies, the business case for their adoption continues to strengthen. In recent years, corporate climate action has expanded beyond internal operations to encompass supply chain partnerships, helping reduce Scope 3 emissions and often resulting in significant cost savings for suppliers who themselves implement process and technological efficiencies.
Market pressures are also driving climate action in the corporate world. Customers along the value chain are demanding that their suppliers take concrete steps to address climate change, while public awareness and concern about corporate environmental responsibility have grown substantially. To remain competitive and maintain their position as industry leaders, companies must demonstrate tangible commitment to climate action. The financial sector has become another powerful driver, with investors scrutinizing companies’ approaches to addressing climate change. Businesses are finding it increasingly necessary to implement robust climate strategies to attract and retain investment, as well as social license to operate.
Regulatory considerations are playing an ever-larger role in corporate decision-making around climate change. As climate disclosure regulations become more prevalent globally, companies that proactively manage their emissions and have systems for comprehensive climate reporting are better positioned to navigate the evolving regulatory landscape. This foresight can significantly reduce both regulatory costs and associated risks. As the world strives to limit global warming to 1.5°C while simultaneously adapting to unavoidable climate impacts, businesses that embrace this dual approach of mitigation and adaptation will find themselves at the forefront of a rapidly changing marketplace.
The clean energy transition also offers substantial economic opportunities. A 2021 analysis conducted by a national association of business leaders found that advanced energy (technology that makes energy cleaner and more efficient) is a $240 billion industry in the U.S. and $1.4 trillion worldwide. Revenue from advanced energy increased 16 percent in 2020, and the industry supports more than 3.6 million jobs across the nation. Revenue from products and services associated with energy-efficient buildings grew to $341.7 billion globally. Consumer attitudes are shifting, as 32% of American consumers prefer companies taking steps to address climate change, according to the Yale Program on Climate Change Communication. As of 2019, one-third of Americans lived in areas committed to 100% clean electricity, and 80% of customer accounts are served by utilities with carbon or emissions reduction goals, indicating growing market demand.
Extreme weather disasters like intense storms, floods, and droughts are becoming more frequent, imposing real costs on companies and the communities they help support. Climate change threatens facilities and operations, supply and distribution chains, and access to electricity and water. It can also prevent employees from coming to work and customers from buying products or services.
As businesses focus on decarbonization, they must also contend with the need to build resilience against the physical impacts and growing risks of climate change. Five years ago, C2ES research showed that nearly all companies in the Standard & Poor’s Global 100 Index had identified physical risks that climate change poses to their businesses. Given the increasing impacts of climate change since then, we anticipate this number has grown and will continue to do so. Companies that incorporate adaptation and resilience strategies into their core business models will be better equipped to withstand and respond to climate-related shocks. Furthermore, there is a growing market for goods and services that address the challenges posed by a changing climate.
Responding to climate challenges not only enhances a business’s resilience but also improves the adaptive capacity of the communities in which they operate. With this in mind, C2ES, Resilience First, and Resilience Rising, launched the Corporate Climate Resilience Pathways Initiative to enable companies to build climate resilience, disclose corporate actions, and track leadership and impact.
The transition to a low-carbon economy presents new opportunities for forward-thinking companies. Those investing in clean energy technologies or developing goods and services that enable low-carbon solutions are well-positioned to capitalize on changing consumer preferences, evolving customer demands, and shifting investor priorities. These efforts not only contribute to global climate mitigation but also position businesses to thrive in an evolving economic landscape.
Many companies across the economy have been investing in renewable energy, setting and meeting emissions targets, incorporating a price on carbon into their business plans, and greening their supply chains over the past decade. In 2019 C2ES found that almost half of the 2016 Fortune 500 companies—and more than 60 percent of the Fortune 100—have set targets to reduce greenhouse gas emissions, improve energy efficiency, and/or increase the use of renewables. More than 80 percent of S&P 500 companies were measuring and managing their greenhouse gas emissions in 2020.
The trend towards net-zero targets is gaining momentum, with C2ES’s Business Environmental Leadership Council setting such goals. More than 5000 companies have set greenhouse gas emission reduction targets in line with climate science to curb global temperature rise to within 1.5 degrees C of pre-industrial levels, and more than 400 companies joined RE100, setting goals to be powered by 100 percent renewable energy. This shift signals a recognition of the long-term business case for decarbonization and positions these companies as leaders in the transition to a low-carbon economy.
In 2024, C2ES launched a new project to develop insights into how companies are developing and communicating their low-carbon transition plans to their investors, policymakers, and the public. The project’s inaugural report, “Corporate Low-Carbon Transition Planning,” analyzes transition planning guidance— in the context of greater regulatory action on corporate climate disclosure—and distills findings from corporate interviews to help companies create and implement low-carbon transition plans in alignment with the Paris Agreement.
Since 1998, C2ES has been working with its Business Environmental Leadership Council to help advance ambitious and practical climate policy solutions. More recently, as more companies are setting climate targets—where their success depends on widely available and cost-effective solutions—a growing number of leading companies are voicing support for comprehensive national and global climate policies that provide a stable framework for business growth and planning in a low-carbon future. This corporate advocacy has taken various forms in recent years. For instance, shortly after the 2020 election, 47 major U.S. companies signed a statement organized by C2ES urging the Biden Administration and Congress to enact ambitious, durable, and bipartisan climate solutions. Similarly, many prominent U.S. companies have joined full-page ads coordinated by C2ES advocating for continued U.S. participation in the Paris Agreement.
These companies recognize that effective climate policies offer significant benefits for their operations and strategic planning. Such policies provide greater certainty for both short- and long-term investments, enabling businesses to better anticipate regulatory risks and identify economic opportunities in the transition to a low-carbon economy. In contrast, a patchwork of disparate state and regional policies often proves more costly and complex for companies to navigate, highlighting the need for coordinated national action.
In the absence of comprehensive federal policies, many companies have taken proactive steps to engage with states and cities on climate and emissions initiatives. These collaborative efforts extend beyond mere compliance, contributing to enhanced community resilience, infrastructure improvements, and more robust emergency planning. This engagement at the local and regional level allows companies to drive progress and build valuable partnerships while advocating for more cohesive national policies.
By supporting climate action at multiple levels of governance, forward-thinking companies are positioning themselves as leaders in the transition to a sustainable economy. They are simultaneously preparing their own operations for a low-carbon, climate-resilient future and helping to shape the policy landscape in which they will operate, demonstrating the increasingly proactive role of business in addressing the climate challenge.
Investors and other stakeholders have emerged as powerful catalysts for corporate climate action, leveraging their influence to drive meaningful change across the business landscape. Shareholders are increasingly calling for climate accountability, passing resolutions that require companies to measure and report their carbon footprints, especially as it relates to mutual funds. This trend is significant, given that these funds manage retirement investments for millions of Americans, effectively aligning long-term financial interests with climate action
In July 2017, an industry-led task force made substantial progress by recommending standardized methods for companies across various sectors to communicate climate risks and opportunities to their stakeholders, including lenders, investors, and insurance underwriters. The impact of these recommendations by the Task Force for Climate-Related Disclosures (TCFD) was substantial, with more than 1,500 organizations—representing a market capitalization of $12.6 trillion and $150 trillion in assets— endorsing these guidelines. This widespread support underscores the financial sector’s recognition of climate change as a critical business consideration. Since then, the TCFD guidelines were adopted by the International Sustainability Standards Board (ISSB).
The push for climate risk disclosure is not limited to voluntary industry initiatives. Financial regulators at both the state level in the United States and in countries worldwide are increasingly mandating, that companies report climate change risks in their financial filings. This regulatory trend further reinforces the importance of climate considerations in corporate governance and financial planning.
Collectively, these developments signal a significant shift in how climate change is perceived and addressed in the corporate world. As investors, regulators, and other stakeholders continue to prioritize climate action, companies are finding themselves compelled to integrate climate considerations into their core business strategies, risk assessments, and long-term planning processes.