SPHERE 3: THE INDUSTRY PERSPECTIVE
Business transition and decarbonization of industries
Our industry Sphere zooms in to the boardroom, the campus, and the factory floor to find out how businesses can accelerate the infrastructure transition.
Here, you can find out how several important industries are progressing with the many transformations that make up the infrastructure transition.
Explore current progress and priorities across 15 industry infrastructure transition goals and eight industries
Explore current progress and priorities across 15 industry infrastructure transition goals and eight industries
Will companies meet their decarbonization targets?
Today’s business leaders are under pressure to decarbonize their business models, assets, and infrastructure to ensure a sustainable and prosperous future.
But leaders are struggling with economic uncertainty, higher interest rates, inadequate supply chains, global competition, and political conflict. Only 40% of the executives in our survey expect their organizations to meet their decarbonization targets this year, and just 46% will accelerate their decarbonization efforts in the year ahead.
Divided on decarbonization targets
Realistic goals need to be supported by detailed plans to reach them. But only 47% of our executives say they have detailed plans in place that show how they will reach their decarbonization targets.
Targets also need to be supported by transparent, empirical methods for target-setting and measurement. Ideally, these should be tied to industry standards and best practice so that regulators, shareholders, and society accept them. But only 37% of our executives say their organization measures the achievement of its climate targets using verifiable and standardized methods and criteria (such as science-based targets).
Likelihood of meeting decarbonization targets for 2030
Very unlikely: 11%
Unlikely: 23%
Equally likely and unlikely: 22%
Likely: 34%
Very likely: 10%
Does rapid decarbonization depend on economic growth? Will companies with weaker growth prospects be much slower to decarbonize? Are countries less likely to reach decarbonization targets when economic growth weakens? Read the full report.
Can investors encourage progress despite the challenges?
Progress might be limited at the moment, but our survey respondents believe their organizations should prioritize the decarbonization of core operations and of transport and fleets in the year ahead.
Accelerating these areas is often capital intensive: organizations will need the support of banks and investors to keep progressing on decarbonization through times of slower growth.
Companies can also face trade-offs between financial performance and decarbonization goals. For instance, in our survey one-third of executives say their organization puts cost and revenue considerations first when choosing a decarbonization strategy. But 44% say that their organization prioritizes finding the quickest way to decarbonize – ahead of cost and revenue implications.
33% say their organization puts cost and revenue considerations first when choosing a decarbonization strategy
33% say their organization puts cost and revenue considerations first when choosing a decarbonization strategy
44% say their organization prioritizes finding the quickest way to decarbonize, ahead of cost and revenue implications
44% say their organization prioritizes finding the quickest way to decarbonize, ahead of cost and revenue implications
Climate risks, decarbonization, and energy transition metrics are also an increasing part of debt and equity funding considerations.
“Banks ask many questions about sustainability before they will lend, including requesting data on many different kinds of metrics,” says Delphine Esculier, CSR Director at Elior/Derichebourg Group. “This is still quite new, and it’s important that all parts of our company are committed to tracking the right data so we can adapt to each investor’s requirements.”
My organization has access to finance for decarbonization or energy transition projects
Are businesses decarbonizing their buildings?
The goal of improving the energy efficiency of buildings is among the most important parts of the infrastructure transition. Globally, buildings produce 39% of energy-related carbon emissions: 28% from operations (heating, cooling, and powering) and 11% from materials and construction.
39% of global emissions are attributed to buildings
39% of global emissions are attributed to buildings
But many organizations do not seem to recognize the impact of buildings, and are not doing enough. In our survey, only 37% of respondents report mature or advanced progress on the energy efficiency of buildings.
Businesses own or operate giant portfolios of real estate in the form of factories, campuses, office buildings, warehouses, transport hubs, laboratories, studios, hospitals, and dozens of other buildings. And 85%–95% of today’s buildings are expected to still be in operation by 2050.
This means that a large part of the infrastructure transition will be decarbonizing existing buildings to make them cleaner and more efficient to operate.
How do we act quickly in conditions of uncertainty?
Executives believe that energy system uncertainty is a powerful reason for slow progress toward clean energy.
Factors affecting the speed of the energy transition
Top 5 accelerators
Top 5 decelerators
1. Investment in skills
1. Economic recession
2. Strong economic growth
2. Lack of skills
3. Subsidies and incentives
3. Energy system uncertainty
4. Lower costs of equipment and technology
4. Insufficient energy storage
5. Private capital investment
5. Lack of public infrastructure investment
Top 5 accelerators
1. Investment in skills
2. Strong economic growth
3. Subsidies and incentives
4. Lower costs of equipment and technology
5. Private capital investment
Top 5 decelerators
1. Economic recession
2. Lack of skills
3. Energy system uncertainty
4. Insufficient energy storage
5. Lack of public infrastructure investment
In every Sphere of our research, uncertainty has been an issue – from the consistency of regulatory frameworks to the changing models, markets, and technologies that will underpin the infrastructure of the future. There are so many difficult, important, and unanswered questions about what to do next, how best to do it, and what to expect.
As a result, we should accept that in the future some decisions will be seen as mistakes. No single organization has all the answers, so we need to continuously raise, discuss, and work together to answer these big questions.
But once we have made the best decisions we can, our priority should be to act quickly and keep the infrastructure transition moving forward at speed.
