Corporate Emissions Could Drop 50% If All Companies Caught Up With Climate Leaders

Mar 9, 2022

  • 1 in 4 European companies disclosing climate data to non-profit CDP now have approved science-based targets (SBTs) for reducing emissions, having grown 85% in a year; 
  • 50% improvement in European banks, investors and insurers reporting ’financed emissions’; 
  • But just 1 in 20 companies have strong targets for emissions, water and zero-deforestation; 
  • And nature risks going unrecognized, as businesses see 10x higher financial impacts from climate risks than for water, and 5x higher impacts than from deforestation;   
  • If all companies matched the best in their industry, emissions equal to the UK and Ireland would be spared each year.   

March 9, 2022 (Berlin): If Europe’s most carbon-intensive companies caught up with the best climate performers, corporate emissions in Europe could be cut in half, according to a new report by CDP, the non-profit that runs the global environmental disclosure system, and global management consultancy Oliver Wyman

The report finds that while European companies are driving global progress on science-based targets (SBTs), they are often failing to act on their wider environmental impacts. 

Now For Nature: The Decade of Delivery – presented today at CDP’s annual high-level event with Euronews TV, finds that the number of companies with approved science-based targets grew 85% last year – to now cover businesses responsible for a third of reported emissions.1

Nonetheless, still only 16% of firms have targets aligned with the Paris agreement’s 1.5°C goal, and corporate progress to deliver so far is slow. COVID-19 brought a 13% drop in reported corporate emissions, but there is little evidence of real reductions. After adjusting for COVID-19, cuts are in the range of the pre-pandemic trend of 1.5% per year – far short of the 4.2% required for companies to align with the Paris agreement’s 1.5°C pathway.2 

The analysis gives reason for optimism, though, with 450 million tonnes of CO2 estimated to be ‘locked’ in and to come from companies with targets being set through the SBTi.3

There are also signs of faster progress in finance. In a 50% annual improvement, nearly half (44%) of European financial institutions now report ‘financed emissions’ – those linked to investment, loans and insurance activities – though only a minority (27%) include at least half of their portfolio. Meanwhile, a third (32%) of disclosing financial institutions report specifically encouraging companies in their portfolios to set emissions targets in line with 1.5°C. 

But the report finds that broader nature issues are yet to see similar progress. Investors are nearly 2x as likely to assess their portfolios for climate risks than for forests (88% vs 46%), for example.

And under a quarter of businesses with supply chains in high deforestation-risk countries have a strong zero-deforestation commitment, and under half of those sourcing beef, soy and palm oil have full traceability systems. 

On water security, 77% of companies reported reducing or maintaining water withdrawals, but just 14% have a target to address water pollution. 

Just 1 in 20 (5%) companies disclosing to CDP on climate, forests and water have a robust emissions target (an SBT), a target for reducing water withdrawals, and a best-practice forests commitment including zero-deforestation.4 

It points to a trend of companies under-appreciating their wider – but significant – environmental impacts on nature and biodiversity. 

Companies’ indirect (scope 3) emissions represent 86% of their emissions – or 6x those they produce directly, according to the report. Yet just 53% of companies disclose data on their most important sources of these indirect emissions – typically from their supply chains and use of their products. 

For companies, it may suggest they are ignoring clear business risks. The average risk related to climate change was valued at €355 million, 10x larger than the average impact of water risks, and 5x larger than deforestation-linked risks, such as incoming EU regulation banning deforestation-linked imports.  

A recurring finding is that leadership is confined to few companies. This is whether looking at action on climate, forests, or water security, and is especially true for engagement throughout value chains. If all companies matched the best in their industry, emissions equal to those of the UK and Ireland could be spared each year. 

Maxfield Weiss, Executive Director at CDP Europe, said: “I’m encouraged by leaders in Europe’s financial system and real economy stepping up. But leadership is really concentrated - we must broaden action out across the whole market. It’s high time all companies and financial institutions with huge, global environmental footprints take urgent action to align their value chains with our planet's natural boundaries. We need to see a true transformation to reach both net-zero emissions and a full recovery of nature.”

Rob Bailey, Partner at Oliver Wyman, added: “There has been a huge acceleration in climate ambition with more companies setting science-based targets, and while this is a worldwide phenomenon, Europe is leading the way. However, progress in reducing emissions is more mixed. The data is clouded by the impact of COVID restrictions, but after adjusting for this it is hard to see evidence of the step-change in emissions reductions needed. There is going to be a laser focus on delivery now.”

CDP Europe’s report analyzed data from over 1220 European companies disclosing their impacts on climate change, forests and water security through CDP’s disclosure system in 2021. 

It is launched today by Oliver Wyman during the CDP Europe Awards: Now For Nature, an event featuring the United Nations climate and biodiversity Executive Secretaries Patricia Espinosa and Elizabeth Mrema, the EU’s climate chief Frans Timmermans, distinguished planetary boundaries scientist Dr. Johan Rockstöm, and Lithuanian Prime Minister Ingrida Šimonytė.   

The full report, Now For Nature, will be available on CDP’s website at from the embargo time of 01:01 CET March 9, 2022. 

For more information or for media enquiries, please contact:

Joshua Snodin, CDP | | +4917645910909

Mona Monzer, CDP |

Patricia Romero, Oliver Wyman | | +44 (0) 7825 193311

About CDP 
CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 590 investors with over $110 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Over 14,000 organizations around the world disclosed data through CDP in 2021, including more than 13,000 companies worth over 64% of global market capitalization, and over 1,100 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit or follow us @CDP to find out more.

About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in more than 70 cities across 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 5,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh McLennan [NYSE: MMC]. For more information, visit Follow Oliver Wyman on Twitter @OliverWyman.