What: Although CEOs understand that climate action is important, they have a hard time knowing what actions to prioritize and how to identify and seize new opportunities created by the global neet-zero push.

Why it is important: Companies are increasingly making climate commitments, but this is no longer enough. Recent global events have shifted the prioritization of initiatives and pushed companies to raise their ambitions.

Some of these factors include:

• Energy crisis: The war between Russia and Ukraine has led to new threats and increased energy shortages. There needs to be an acceleration of investments in efficiency and non-fossil energy.
• Net-zero ambitions are accelerating: There is a demand for green technologies and renewable energy to power them.
• There is an increase in green investments: This creates a major opportunity for companies to access new funding sources and striking innovative partnerships.
• The first-mover advantage window is closing: Lack of action will only increase the scale of emissions reductions required down the road and raise the risk of impacts from global warming. Those that don’t start now will be behind.

Unfortunately, too many industrial companies today are underestimating the speed with which this change is likely to occur. Many compare the business case for green products with the business case for their existing base business under current market conditions and determine that green markets are not yet attractive enough to warrant big investments. But the logic inherent in such an assessment is flawed: companies are assuming the base case is here to stay, when in fact it may soon start to erode. And they insufficiently anticipate the sudden shift in demand likely to happen in the next few years.

Scope 3 emissions are the next critical and challenging topics to tackle in the net-zero journey. Many companies have made progress in tracking and managing emissions from their own operations (Scope 1 and Scope 2 emissions). But they face increasing pressure on all fronts to measure and slash their Scope 3 emissions—the carbon released along the value chain, including by suppliers and customers. Now is the time for companies to gain a clear picture of their entire emissions footprint, create a plan to reduce those emissions, and rapidly turn that plan into action.

The climate actions companies should take today