20 minute read 2 Nov 2022
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How can slowing climate change accelerate your financial performance?

By EY Global

Ernst & Young Global Ltd.

20 minute read 2 Nov 2022

The EY Sustainable Value Study finds that companies acting on climate change realize above-expected returns across five sources of value.

In brief

  • New research challenges the idea that there is a trade-off between financial and nonfinancial impacts of climate change investments.
  • Comprehensive transformational approaches to sustainability return more value — financial, customer, employee, societal and planetary — than companies anticipate.
  • Embracing value-led sustainability can help companies unlock more value from their climate actions and accelerate sustainable business transformation.

Climate change is everybody’s business. While government delegates from around the world meet at COP27 to deliberate on how the world can slow climate change, the private sector has a role to play, too. Companies have almost universally accepted this fact. Our survey of more than 500 companies leading on sustainability finds that 93% have made public climate commitments. In spite of that, progress remains too slow to deliver the emissions curbs the world needs.

Yet companies that take decisive climate action do not just create more value for the planet, they also capture more financial value for themselves on measures such as revenue growth and earnings. At the global EY organization, we call this value-led sustainability. More than two-thirds of all respondents — 69% — report that they capture higher financial value than expected from their climate initiatives.

Value captured


say that financial value from climate change initiatives exceeds their expectations.

This challenges the perception that there is a trade-off between financial and nonfinancial impact. To the contrary, for a subset of “pacesetter” companies taking the boldest steps, comprehensive climate action helped boost customer value (such as brand perception and purchasing behavior) as well as employee value (such as staff recruitment and retention), which in turn led to improved financial value. These pacesetters are 2.4 times more likely than companies taking few climate actions (observers) to report significantly higher-than-expected financial value as a result of their climate initiatives. They’ve also achieved higher emissions reductions to-date.

By putting climate action at the heart of business strategy, value is delivered across a range of vital measures. The sooner companies get started, the more they learn and the more value they receive. What’s good for the planet is also good for business.

Watch insights from EY leaders on how investing in sustainability can create value for your business and the planet, and read on to find out how you can advance your climate journey now.

  • About the research

    From July to October 2022, EY teams conducted research to understand how companies are currently investing in climate actions, the value being realized from these investments (as well as the trade-offs), and the opportunities for companies to accelerate and scale climate actions to create value for people, planet and stakeholders.

    We surveyed 506 corporate sustainability leaders across industries (financial, energy, technology/media/telecommunications, consumer, manufacturing, health care, real estate) and 21 countries covering the Americas, Asia-Pacific and EMEIA (Europe, the Middle East, India and Africa). Respondents represented companies with over US$1b in annual revenue; 60% of respondents led their organization’s climate change agenda, while the remainder led or oversaw a major climate initiative at their organization. In addition, we interviewed chief sustainability officers at seven companies leading sustainability in their fields.

    We should note that the companies surveyed were not a representative sample of global businesses. Each has an overarching sustainability strategy or major climate change initiative that puts them at the forefront of sustainability action in business relative to most companies around the world. This report should be read in that light.

  • Identifying pacesetter companies

    To segment companies, we measured the status of 32 actions to address climate change in five areas: measurement and reporting, governance and oversight, operations and supply chain, customers and product offering, and suppliers and third parties.

    For each respondent, we scored each action based on the level of progress that respondents reported (from “no plans to do” to “completed”). Using the total score in each area as well as the average across all five areas, we created an index that segmented respondents into high action (pacesetter), medium action (explorer) and low action (observer).

    Pacesetters have completed an average of 18 actions, compared with nine for explorers and one for observers. Pacesetters comprised about a third (32%) of companies surveyed, while explorers made up 45% of the survey sample and observers comprised 23%.

Aerial view of new trucks awaiting sale
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Chapter 1

Companies are decarbonizing, but not at the speed or scale needed

Faster and deeper progress on climate action is needed to meet global targets and avoid the most dangerous impacts of climate change.

The positive news is that companies are committed to climate action. In a recent study by Climate Impact Partners, 63% of companies in the Fortune Global 500 reported setting a major climate milestone.Our study focused on large companies that have designated leaders for their overarching sustainability strategy or major climate change initiatives, putting them at the forefront of sustainability action in business. In our sample of these companies, the vast majority (93%) have made public commitments.

These commitments typically have a specific emissions reduction target, but fewer have more ambitious goals like achieving net-zero emissions (11% of respondents). The average respondent plans to slash its greenhouse gas emissions by 41% (excluding carbon offsets). Many companies surveyed are over halfway toward achieving that, with the average survey respondent reporting an emissions reduction of 28% to date (excluding carbon offsets). Companies have made a start reducing their emissions and will invest further: 61% of our survey respondents plan to increase their spend next year to address climate change.

There is room for improvement on the scale and speed of these reductions, however. Taken together, respondents’ commitments fall short of what the global economy needs to stave off the most dangerous impacts of climate change. 

The United Nations Intergovernmental Panel on Climate Change calls for the world to cut emissions by 45% by 2030 and achieve net-zero emissions by 2050 to keep global warming below 1.5 degrees Celsius above preindustrial levels. To achieve this, the Science Based Targets Initiative urges rapid, deep emissions cuts throughout a company’s value chain, with both near-term and long-term targets.

Yet in our survey group of leading companies, only 29% use accredited science-based targets and only about four in 10 plan to reduce emissions by 45% or more (excluding carbon offsets). While offsets will be needed for emissions that are most difficult or expensive to reduce, businesses should prioritize curbing emissions to the greatest extent possible. 

Planned reductions are also unlikely to happen soon enough to meet global goals. Just 35% of companies have a commitment milestone on or before 2030, and only 38% have laid out intermediate targets toward their long-term goals. Despite this gap with the UN’s stated goals for 2030, 70% of respondents are confident their organization is being ambitious enough to make a meaningful impact on climate change. While the companies we surveyed are clearly committed to reducing their emissions, much faster and deeper progress is required to meet global targets. This need is even more pressing when considering that these gaps are among organizations leading on climate action relative to the broader market.

Woman reclines on a sofa and uses a thermostat app on her smart phone
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Chapter 2

A value-led sustainability approach is driving financial impacts

More than two-thirds of respondents captured higher-than-expected value from their climate change initiatives.

Companies need a mindset shift to consider multiple types of value — societal, planetary, customer, employee — to build financial value from their climate actions. This entails a recognition that:

  • Sources of value are deeply integrated and can be complementary rather than competitive.
  • Sustainability can deliver value to customers and employees; these in turn create a positive return to the business and the planet.
  • Companies at any stage in their journey can harness untapped opportunities to uncover more value.
  • Five sources of value for companies addressing climate change

    • Financial value, e.g., revenue growth, earnings
    • Employee value, e.g., recruitment, retention, satisfaction
    • Customer value, e.g., quality, brand perception, purchasing behavior
    • Societal value, e.g., communities we operate in, public health, economic opportunity
    • Planetary value, e.g., reducing greenhouse gas emissions
We look for holistic solutions that address as many challenges as we can to drive impact at scale, for our customers, the communities in which we operate, and our planet.
Greg Downing
Sustainability Director, Climate, Cargill

In fact, companies that undertake climate change initiatives tend to find that they return significantly more financial value than expected. One reason for this is that they return other forms of value, such as customer and employee value, which in turn contribute to financial goals. As Greg Downing, Sustainability Director for Climate at Cargill, expressed it: “We look for holistic solutions that address as many challenges as we can to drive impact at scale, for our customers, the communities in which we operate, and our planet.”

In our survey, 45% of pacesetter companies consider at least four of the five types of value when evaluating climate investments. In practice, companies seek investments that can achieve multiple types of value. For example, brewing company AB InBev buys barley and hops from farmers who practice climate-resilient agriculture. At the same time, it provides farmers with technical and financial tools to improve productivity, combining climate objectives with societal ones. 

Three in four companies (75%) consider customer value when assessing a climate investment. For Unilever, printing a product’s carbon emissions on the label helps build trust with consumers, who are willing to buy sustainable products despite current cost-of-living concerns

Meanwhile, Cisco has responded to customers seeking to meet climate and other environmental and social goals by developing energy-efficient products, delivering both customer and planetary value. “There is an opportunity for us to help [customers] understand that making sustainable choices can also have a good return on investment,” said Cisco Chief Sustainability Officer Mary de Wysocki.

These multiple types of value — societal, planetary, customer, employee — need to be considered together, and can be a means to build financial value. As Pilar Cruz, Chief Sustainability Officer at Cargill, put it, “Social and environmental issues are interconnected. By looking at sustainability solutions that provide stacked benefits beyond climate, we can deliver greater collective impact. That means expanding biodiversity, protecting our water resources, improving farmer livelihoods, uplifting local communities, helping farmers to be more productive and efficient, and empowering women.” 

Financial motivations, planetary outcomes

Today, companies are almost twice as likely to prioritize financial value than planetary value as the most important consideration when evaluating a climate investment (28% vs. 15%). 

However, some companies have started making the connection between their investment in climate initiatives and delivering long-term value to the business.

Cement maker CEMEX has found that not only will curbing emissions through the use of alternative fuels with high biomass content quickly deliver cost savings, but in the long run, investors will favor climate action leaders. According to CEMEX Chief Sustainability Officer Vicente Saiso, “investors are already differentiating in which companies they invest, and that’s going to be even more dramatic in the future. The sustainability leaders in each industry sector are going to have a bigger chance to be more attractive to investors. And at the same time, it’s a threat, because if you don’t do it, investors will prefer to invest their money in other companies.”

Indeed, investors are now more willing than ever to act on sustainability metrics. For example, EY research shows that 74% of institutional investors are now more likely to divest based on poor environmental, social and governance (ESG) performance, than before the COVID-19 pandemic. 

Because they are often selected with financial value in mind, climate initiatives are more likely to have a positive than negative financial return. What’s unexpected was the size of the return. Nearly seven in 10 companies report capturing somewhat or significantly higher-than-expected financial value from their climate initiatives. 

Wider research backs up this finding. In 2019, CDP’s Global Climate Change Analysis found that the potential value of sustainable business opportunities (US$2.1t) is almost seven times the cost of realizing them (US$311b in costs).2

Financial and planetary value are not mutually exclusive

A key debate in the boardroom and C-suite is about balancing the financial and nonfinancial trade-offs of pursuing climate action — something two in three companies (64%) agree is challenging. But while trade-offs are not always avoidable, financial and planetary impacts are not mutually exclusive. When global disruptions arise, long-term sustainability planning makes it easier for companies to stay the course on their climate plans or find new opportunities to create value from sustainability. This helps safeguard climate initiatives from becoming side projects or marginal philanthropic efforts that are liable to be cut at the first sign of trouble.

Companies should also look to climate initiatives as a means to mitigate risks. Climate risk is of particular concern because it is often measured inadequately. The most recent EY Global Climate Risk Barometer found that too many companies are still either not conducting scenario analysis or not disclosing the results. Under a third of respondents in that survey reference climate-related matters in their financial statements, both qualitatively and quantitatively.

Yet scenario analysis, such as that recommended by the Task Force on Climate-related Financial Disclosures (TCFD), is a powerful tool for anticipating climate-related risks and opportunities. Some 95% of “pacesetters” in our survey conduct scenario analysis every year or are on their way to doing so, compared with just 35% of “observers.”

In addition to mitigating risks, many interviewees are uncovering opportunities to create new products and services — or even capturing new markets. Unilever, for example, aims to sell €‎1b worth of plant-based meat and dairy alternatives by 2027. And Cargill established Cargill RegenConnect, a regenerative agriculture program that connects farmers to new and emerging markets like the carbon marketplace.

Finally, being intentional about the connection between financial and other forms of value can make it easier for companies to embark on holistic ambitious climate strategies. 

While win-win scenarios like the Cargill example provide an easier path to management buy-in, companies can’t realistically expect every initiative to have a positive financial impact. Nor should governments or society realistically expect companies to altruistically invest in climate initiatives regardless of their financial returns.

The key is creating a balanced portfolio — initiatives that generate financial value subsidize those that have positive planetary impact but minimal or negative financial return. We see that, on average, 37% of initiatives will have a positive return over their lifetime, while only 19% will have a negative return. This should motivate those in the early stages of their climate action journey to increase their investments in a balanced portfolio of climate initiatives.

But, even when companies take a value-led approach, they are not always clear how to prioritize actions. Learning from those companies that have made the most progress toward climate goals can help.

Person watching sunrise from mountain peak norway
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Chapter 3

The more companies act on climate change, the better their returns

Climate action is a journey. Actions range from the incremental to the transformational. The earlier companies start, the more they learn.

One result to emerge clearly from our survey is that a broad-based value-driven approach pays off. Pacesetter companies are 2.4 times more likely to report significantly higher financial value than expected (52% vs. 21% of observer companies) and have achieved a larger reduction in emissions to date (32% vs. 27%).

Another is that for all companies, climate action is a journey, and the most appropriate climate actions for any given company depend on where it is.

A broad-based, value-driven approach works. The survey found that pacesetter companies are 2.4 times more likely to report significantly higher-than-expected financial value than observer companies.

Pacesetter companies get results

Pacesetters — companies that are relatively mature in terms of their climate action journey — are taking action across all five categories, from governance and measurement to operations, suppliers and customers.

For the most mature companies, this process often involves both incremental and transformative investments in multiple categories of action, set against strategic short-, medium- and long-term targets. For instance, pacesetter companies in our sample are three times as likely to have established new business lines to capture climate-related market opportunities: 94% of pacesetters have this action completed or in progress, compared with 32% of observers. 

Notably, many of our interviewees across sectors opted to apply climate actions widely across the business, even when specific regulatory environments and pressures varied by country. Many set targets or launched products at a global or regional level. This can have surprising results. For example, CEMEX found greater demand than expected for its low-carbon concrete in emerging markets.

First steps on the climate action journey

A company’s climate action path forward is not a straight line; it requires actions and strategies to be revisited and reviewed. It requires interim commitments to make a long-term impact over a time horizon longer than business leaders typically contemplate. Companies do not need to perfect their actions in any one area to progress. But to begin realizing value, all companies need to start setting ambitious achievable goals and take action to meet them.

In our survey, we mapped out 32 climate actions ranging from the incremental — such as identifying major emissions sources — to the strategic and transformational — such as pursuing an M&A strategy in line with climate ambitions or establishing new business lines to capture climate-related market opportunities. On average, companies have completed 10 of the 32 actions, signifying most companies are at some stage of turning their commitments into action.

These actions fell into five broad categories: measurement, governance, operations, customer and supplier, and third party. Actions focused on measurement and governance are common starting points, with actions in these areas making up the top-five most-completed actions overall. At the initial stages of their journey, companies typically focus on actions that require less financial outlay, such as identifying major emissions sources or assigning board responsibility for climate.

However, interviews revealed that many companies continuously develop their measurement and governance processes, then revisit their targets and use interim targets, milestones and scenarios to accelerate action. As Cisco’s de Wysocki explains, being able to attribute business impact to sustainability investments helps further the internal case for making additional investments and taking additional actions.

Male and female delivery drivers talking in street by their e scooters
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Chapter 4

How companies can advance in their climate journey

Pacesetter companies form partnerships and take a transformational approach to climate action, particularly with suppliers.

Pacesetter companies are taking effective climate action by approaching it as business transformation, adapting their business models to embrace sustainability. This chapter first assesses what can be learned from them and then looks at how they and other companies can make still more progress in their climate journey.

Bolder collaborations

Sustainability is everybody’s business. For companies to take effective climate action, they need to recognize the value of working with a broader set of stakeholders — across industries and regions, with competitors, startups, governments, clients and communities. Partnerships provide important stakeholder input, enable companies to reap the full value of their initiatives and allow them to collaborate on large-scale projects they would not undertake alone. 

Our interviewees tend to partner with a broad set of stakeholders, even direct competitors. Vicente Saiso of CEMEX, for example, talked about his company’s membership in the Global Cement & Concrete Association, an industry initiative. Via the association, the industry funds academic research into technologies for decarbonizing the cement sector and works with competitors as partners on issues that affect all.

The pacesetter companies surveyed said they benefit from the collective intelligence and reach of diverse partnerships: 51% have established a strategic partnership or joint venture, and 57% have already partnered with a competitor (vs. 22% of observer companies). Pacesetters are more likely to see benefits from these collaborations, reporting that partnerships lower costs and increase the likelihood of success for their climate change initiatives.

Chain reaction: the promise of supply chain transformation

For many companies, supply chain transformation is also a powerful lever for impact: 72% of pacesetters have taken action to identify their major sources of emissions and 68% require suppliers to reduce their emissions.

Wider research suggests supply chains account for 75% of companies’ emissions on average, rising to close to 100% in some sectors.Companies are also starting to recognize the need to enhance resilience here: 52% of our pacesetter companies have partnered with a supplier to help reduce emissions. Interviewees emphasized that this decision was the result of understanding that the vast majority of emissions lay in Scope 3, which includes upstream and downstream emissions. Mars Inc., for instance, discovered that its operations accounted for just 5% of its emissions, and that the carbon footprint of its full value chain was much larger, approximately the size of a small country. Since 2019, the company has worked with suppliers to set science-based targets, embrace 100% renewable energy or curb its emissions in various ways to drive down emissions within its value chain. 

Challenges along the journey

Besides the general obstacles and opportunities all companies face, different challenges arise as they move though the stages of their climate action journey. 

Our survey found that pacesetter companies still need to improve coordination of initiatives and team collaboration, with 67% saying that so many groups are involved, it is difficult to make progress, and nearly half — 44% — saying that collaboration between teams needs to significantly improve. To implement transformative sustainability initiatives, chief sustainability officers must work with a wide range of leaders, boards, business units and functions such as finance and compliance, says Cisco’s de Wysocki. “I don't think many companies understand how significant and how transformational integrating environmental sustainability will be to the business.” As climate actions multiply and progress, they also need to be managed and coordinated so they form a coherent strategy.

Meanwhile, observer companies seek to better understand the trade-offs involved in a sustainability investment. The greater-than-expected financial value that companies draw from climate actions should act as a motivator to pursuing sustainability investments. 

Observer companies also tend to see executing climate initiatives as a higher priority, ranking it their second-most-important area for improvement. They are also less likely to say it is easy to measure value and create accountability for progress.

I don't think many companies understand how significant and how transformational integrating environmental sustainability will be to the business.
Mary de Wysocki
Chief Sustainability Officer, Cisco

Investing in talent: a commonly missed opportunity

Companies at all stages of their climate journey should consider how to harness employee value to support sustainability initiatives. Talent is a key area for this: 35% of all companies surveyed say difficulty retaining or upskilling talent on climate change is a top internal barrier to doing more on climate change, and 28% say difficulty hiring talent with climate change skills is a key external barrier.

Yet it does not appear to be a priority area for investment. Only 23% of survey respondents list human resources and talent as one of their top three climate investments. Additionally, just 27% completed plans to hire or upskill talent to acquire climate change expertise.

This could be a significant opportunity for companies to accelerate transformation from within. As companies seek to embed sustainability across functions, they will need education, capacity building and knowledge sharing, and a tailored strategy for developing the skill sets they need. For example, AB InBev has begun building climate analytics and data science capabilities to support its climate actions, and views social and behavioral science capabilities as the next frontier: engaging suppliers, consumers and communities more deeply on climate in future. In parallel, the company continues to build a “team of teams” with training in the foundations of climate and sustainability.

The sooner you start, the more you learn

Pacesetter companies have learned to apply lessons from previous or parallel projects, as well as across different markets. Those operating globally can take learnings gained in one location and apply them to others. One simple benefit of climate action is gathering initial experience on which to build subsequently.

Leading companies are still learning, reviewing their long-term strategies and revisiting their targets. Successful strategies are rooted in mindsets that prioritize long term value, flexibility and a willingness to continuously improve. 

While every company is on an implementation journey, EY Net Zero Center’s 2022 report, “Essential, expensive and evolving: The outlook for carbon credits and offsets (via ey.com Australia),” found that companies that act now will be most likely to achieve ambitious climate and sustainability targets. As technology evolves, regulation tightens, stakeholder pressure increases and competition intensifies, companies that have already started taking comprehensive transformative action will be more resilient and better positioned to capture the value from their climate initiatives.

We’re not there yet

The imperative to act on climate change is urgent. The coming years offer a narrow window during which it is still possible to limit Earth’s temperature rise to 1.5 degrees Celsius. 

Companies have a key role to play in this, but they need to think differently about this challenge. They should no longer assume there is a trade-off between financial value and climate initiatives. Rather, they should see climate initiatives as a means of protecting and creating more value for business, society and the planet simultaneously.

Sustainability initiatives deliver financial value in myriad ways. Our survey finds that a clear majority — 69% — of companies are already finding that financial returns on their investments surpass their expectations. They are realizing similarly high levels of value for their customers, employees, and society as well.

Our research also shows that climate action is a journey. As companies take action to address climate change, they build their own capacity, which in turn makes it easier to make further progress. 

One key message from these results is: Get started. Companies that have been setting targets, implementing initiatives, advancing their capacity and building resilience for longer are creating more value and struggling less with implementation than those starting out.

Five actions to take

Looking at lessons from those who are leading the charge, as well as acknowledging where they and others still need to improve, we see a number of actions that companies should take in order to create more value from their climate agenda for their stakeholders and for the planet.

  1. Challenge your level of ambition – Even for the companies included in this survey that have demonstrated commitment to change, we are not seeing ambitious-enough targets to meet the goals set forth in the Paris Agreement.
  2. Recognize complexity – Driving true impact on emissions reduction is a complex process and requires measurements to track progress and assess ROI from the onset. 
  3. Collaborate – Collaborate both within your sector and across sectors. This is a collective challenge and working with industry and cross-sector groups will accelerate change.
  4. Influence your supply chain – Many organizations will have the greatest opportunity to influence emissions reduction through their supply chains by engaging and supporting suppliers. 
  5. Invest in talent – Too many companies recognize there is insufficient sustainability talent available to meet the challenge but are not making this a priority. Upskilling across all relevant functions in the organization and attracting specialists can become a source of advantage.

As Cisco CSO Mary de Wysocki said, there is an “opportunity to help customers understand that making sustainable choices can also have a good return on investment.” The same is true for companies across the board. The opportunity to create employee, customer and societal value is great. Companies that use climate action to inform strategic choices, drive innovation and maximize their financial value will become leaders in the coming years.


Sustainability action pays off financially: 69% of the companies we surveyed reported higher financial value like revenue growth and earnings from decisive climate action. Companies should take climate action across measurement, governance, product and customer offerings, operations and supply chain, and suppliers, and should start early to gain experience.

About this article

By EY Global

Ernst & Young Global Ltd.