Gaps in businesses’ climate action plans slow progress on net-zero goals as global uncertainty remains

• Two-thirds of businesses have climate action plans, and one in ten have made progress in developing one
• However, less than half have targets that meet scientific standards
• Inaction on climate risks could cost businesses up to 15% of annual revenue

Many of the world’s biggest businesses do not have climate transition plans that are robust enough to support global efforts to cap rising temperatures and — while some progress is being made — more needs to be done to guard against the biggest environmental risks, according to the latest EY Global Climate Action Barometer.

The report examines the views of more than 850 companies, across 50 countries and 13 sectors, that have been identified as climate leaders and looks at the extent to which they are taking action to achieve vital climate goals, and whether they are disclosing their actions in climate reporting. It looks at the steps they are taking and where they are falling short.

The findings reveal that, while two-thirds of businesses (64%) have ‘net-zero’ transition plans in place, and one in ten (12%) have made strong progress in developing or disclosing plans, there are gaps which threaten to undermine progress.

Less than half (48%) of organizations have kept their targets in line with scientific guidance on how to mitigate against the worst effects of global warming.

In addition, of the companies that do have net-zero targets, almost two-thirds (63%) rely on carbon credits – meaning that they are simply offsetting their emissions rather than actively decarbonizing. This use of carbon credits is especially high in financial services (78%) and transportation (69%) – sectors which are struggling to decarbonize.

Dr. Velislava Ivanova, EY Global Strategy and Markets Leader, Climate Change and Sustainability Services, says:

“The science on climate change is clear: the world is getting warmer and any reversal of this trend hinges on businesses taking credible action and putting in place transition plans which drive real progress toward climate goals. It is not easy – uncertainty, volatility and disruption abound - but companies that rise to the challenge and adapt their business models to meet climate goals will be the ones that flourish.”

“And the opportunity to drive change has never been greater. As we approach COP30, 190 countries have been preparing to update their Nationally Determined Contributions (NDCs) and businesses around the world are gearing up to play a pivotal role in turning these ambitions into real world impacts.”

The research shows that one-third (34%) of businesses interviewed have restated their climate targets to take into account factors such as reduced funding or regulatory uncertainty, and it reveals that more than two-fifths (44%) of these restatements were weakened, either by being less ambitious or because of delayed timelines.

According to the Barometer, most companies (68%) have assessed both the transitional risks and physical risks they face related to climate change – i.e., the risks businesses face as they move toward decarbonization and those that arise directly from climate-related events. However, less than a fifth (17%) report on the financial impact of these risks meaning their exposure to climate change is not clear or quantifiable.

Dr. Ivanova says:

“We know from client work, that many businesses are doing much more to tackle climate risks than they are acknowledging in public – and it’s important that these efforts don’t go undisclosed. We must not forget the value of disclosure and reporting – companies that are open about their progress and their challenges are the ones that build trust with their customers, investors and beyond.”

The vast majority of the leading businesses that took part in the research (92%) say they’ve fully analyzed the likely impact of physical risks on their operations, but only two-fifths (44%) report having measures in place that will help them adapt to manage these risks.

The research also points to a lack of effective governance across many organizations, which could be undermining their efforts to take action on climate change. For example, just 8% of companies have board oversight over capital allocation, 21% over target setting, and only 41% over progress monitoring.

Separate EY analysis, alongside the Barometer findings, highlights the cost of inaction for businesses. It shows that where organizations fail to address the risks of climate change, they could lose out on up to 15% of annual revenue.

Dr. Ivanova, says:

“For any business to remain resilient and ensure continuity in the face of climate change, long-term planning is essential. This means putting in place actionable transition plans that show that businesses are anticipating risks and adapting strategies as we move toward a low carbon economy.”

Christophe Lumsden, EY Global Climate and Decarbonization Leader, Climate Change and Sustainability Services, says:

“The path to decarbonization is one that demands cooperation. On the one hand, regulators and policy makers need to create an environment which spurs business to act; and on the other hand, companies have to make sure that, through strategy, operations, and governance, they are working toward long-term value.

“In this year’s Barometer we’ve set out a series of recommendations to help businesses plan and execute climate transition. We’re advising them to embed climate goals into strategy; put in place clear transition plans, risk assessments and governance processes; and explore the opportunities afforded by AI.”

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Notes to Editors

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About the research

The EY Global Climate Action Barometer provides an annual analysis of organizations’ climate-related risk disclosures, with the aim of tracking their progress against climate related goals. This assessment provides not only companies, but also external stakeholders of all types (such as national regulators, financial institutions and investors), with an understanding of the current state of global climate reporting and transition planning.

The first edition of the Barometer (then named the EY Global Climate Risk Barometer) was issued in December 2018. Since then, the Barometer has analyzed the extent to which the disclosures of approximately 1,400 global companies are in line with the 11 pillars of the Task Force on Climate-related Financial Disclosures, and their preparedness for, and level of adoption of, IFRS S2. It also measures the extent to which climate-related risk and opportunities are reflected in companies’ financial statements. The last analysis of this nature was conducted in 2024.

This year’s Barometer is a more targeted study, focusing on 857 companies across 50 countries, operating in 13 sectors. EY teams analyzed the reporting of these companies to assess the level of action being taken in key areas including decarbonization, risk mitigation, target setting and use of carbon credits. Compared with previous Barometers, this study offers a more in-depth analysis of companies’ progress with climate action, transition planning and adaption to climate risk. It also highlights where good progress is being made and where greater improvement is needed. Companies selected for inclusion were drawn from the population of companies analyzed for the 2024 EY Global Climate Action Barometer (CAB24). They were identified as showing leadership on climate ambition, disclosure quality and climate risk management.

Companies that had already disclosed or were preparing to disclose a climate transition plan in CAB24 were prioritized, reflecting a strategic commitment to decarbonization. Also included were companies that had started their climate risk journey — i.e., they had undertaken a qualitative risk assessment as a basic minimum. The selected companies demonstrated strong climate risk governance, including quantitative scenario analysis and a superior climate financial impact rating.

The findings of this study are primarily based on companies’ public disclosures and assume that all of their actions/ initiatives are disclosed in their corporate reports/ CDP reporting for either 2023 or 2024. Analysis of the disclosures was undertaken between April and July 2025. In addition, eight in-depth qualitative interviews were conducted with EY subject matter professionals. These interviews explored the trends in the results and their implications for individual sectors.