According to a new survey released by the Boston Consulting Group (BCG), more than half of companies globally report that the use of AI is having a major impact on key areas of their decarbonization efforts, such as measuring and reporting emissions, and the use of AI has also proven to be a significant driver of companies’ ability to realize substantial financial benefits related to sustainability, the report said.
Despite the availability of new tools and apparent financial benefits, however, the survey found little progress by companies over the past year in their decarbonization initiatives.
For the report, the fourth annual CO2 AI + BCG Carbon Emissions Survey, BCG and corporate sustainability management platform CO2 AI surveyed 1,864 executives responsible for measuring, reporting, and driving emissions reduction initiatives at companies with at least 1,000 employees and annual revenue ranging from $100 million to more than $20 billion, across 16 industries and 26 countries.
Compared to previous surveysThe report reveals that companies’ progress in advancing decarbonisation initiatives has largely stagnated over the past year, with only 9% of respondents saying their companies are comprehensively reporting emissions across Scopes 1, 2 and 3, down from 10% in 2023, only 16% have set emissions reduction targets across all scopes (down from 19% last year), and only 11% have achieved emissions reductions in line with their ambitions (down from 14% last year).
The slow progress, however, is explained by the survey results, which show that companies are realizing substantial financial benefits from their decarbonization efforts. According to the study, more than two-thirds of companies reported annual net decarbonization benefits equal to at least 3% of sales, with 25% reporting benefits equal to at least 7% of sales, or an average of about $200 million. Cost savings were among the top drivers of reported benefits, stemming from factors such as efficiency, waste reduction, rationalization of materials or environmental footprint, and use of renewable energy, according to BCG.
Hubertus Meinecke, BCG Global Climate and Sustainability Leader and co-author of the study, said:
“This year’s survey highlights the substantial benefits some companies are realizing from decarbonization, including significant financial gains, improved reputation and increased operational efficiency.”
The report also assessed the links between actions taken by companies and realising the financial benefits of decarbonisation, with the strongest link revealed to be the use of artificial intelligence, with companies using AI in their emissions reduction efforts being 4.5 times more likely to be included among those seeing net benefits equivalent to at least 7% of annual revenue.
Other important benefit drivers include calculating emissions at the product level, with companies reporting doing so being 4 times more likely to be in the top benefit group, followed by developing a climate transition plan (2.9 times more likely), setting validated emissions reduction targets (1.9 times more likely), reporting all material GHG emissions scopes (1.5 times more likely), and measuring all emissions scopes (1.6 times more likely).
Diana Dimitrova, BCG managing partner and director and co-author of the study, said:
“Too few companies are grasping the financial benefits of decarbonization. By mastering essential fundamental actions such as measuring, reporting, setting targets and implementing advanced sustainability metrics, these companies can become more efficient, more profitable and demonstrate a stronger commitment to a greener future.”
According to the report, the main benefits of using AI for sustainability initiatives include increased efficiency through the automation of tasks, allowing companies to focus on activities such as reducing emissions and capturing value.
Companies appear to recognize the value of AI in their decarbonization efforts, with more than half of respondents saying AI is having a “major” or “extremely significant” impact in areas such as measuring emissions (55%), reporting emissions (53%), planning for reduction opportunities (51%), and ensuring sustainability in the design of operations, processes, and products (51%). Looking ahead, respondents also said they expect AI to help identify opportunities to improve energy efficiency and collect and analyze emissions data.
While acknowledging the benefits, respondents also highlighted several key barriers preventing the use of AI to support their decarbonization efforts, with the high cost of AI-based solutions being the most cited issue, reported by 34%, followed by the difficulty of training and upskilling at 30%.
Charlotte Degot, CEO and Founder of CO2 AI and co-author of the report, said:
“The scope for businesses to increase ambition and take decisive action to limit global warming to 1.5°C is rapidly shrinking, but AI has the potential to be a game changer, enabling companies to reduce emissions and make meaningful progress on climate change mitigation. Our research shows that businesses need to do more to use AI responsibly to ensure they can meet their climate and business goals.”
Click here to access the report.
