Corporate Decarbonization: How to Combine Sustainability with Profitability

The Climate Crisis and the Role of Business

The impact of climate change has never been more evident. The year 2023 stands out as the hottest in history, intensifying global warnings about the need for climate action. At the same time, the business world is facing increasing pressure to adopt more sustainable practices, not only for ethical reasons, but also in response to regulatory changes, consumer expectations and investor demands.

However, global progress in corporate decarbonization has been slowing down. A recent study by the Boston Consulting Group (BCG) reveals a worrying trend: fewer companies are reporting emissions, setting clear targets and achieving their goals. On the other hand, those that do invest in decarbonization report significant financial benefits, exceeding 200 million dollars a year on average.

The central question is clear: how do these companies manage to combine sustainability with profitability? This article explores the reasons behind the success of leading organizations and presents concrete strategies that other companies can adopt to achieve similar results.

The Current State of Decarbonization: Progress and Setbacks

According to the report Boosting Your Bottom Line Through Decarbonization, drawn up by BCG in partnership with CO2AI, progress in corporate decarbonization has suffered setbacks. This study, based on responses from 1,864 companies in 16 sectors responsible for 45% of global emissions, presents the following results:

• Only 9% of companies report emissions comprehensively in scopes 1, 2 and 3, representing a decrease compared to 2023.

• Only 16% set targets for all three areas, a decrease of 3 percentage points on the previous year.

• Only 11% managed to reduce emissions in line with the targets set, also with a decrease of 3 percentage points.

These statistics reflect concrete challenges faced by many organizations, such as:

• Measurement Complexity: Calculating carbon emissions, especially in scope 3 (indirect emissions from the value chain), remains a technical challenge.

• Lack of Investment: Insufficient resources for climate transition technologies and the training of specialized teams.

• Focus on the Short Term: Many managers still see sustainability as a cost rather than a long-term strategic opportunity.

Despite this scenario, there is a growing group of companies leading the transition. These organizations show that decarbonization is not only possible, but also highly profitable.

In the words of Manuel Luiz, Managing Director and Partner of BCG in Lisbon in an interview with Greensavers:

"Despite the growing relevance of sustainability in the corporate world and the potential financial advantages that reducing emissions can bring, still few organizations are taking advantage of these opportunities. The current market context has led to a setback in the decarbonization process of companies at a global level, raising some warning signs, but also opportunities for improvement. (...) The adoption of practices such as the definition of objectives, measurement and communication of emissions, as well as the definition of climate transition plans, will allow companies to become more efficient, profitable and competitive, while demonstrating a solid commitment to a more sustainable future."

This perspective highlights not only the challenges, but also the potential gains for organizations that lead the climate transition. Companies that set clear targets, measure emissions comprehensively and communicate their efforts are able to balance operational efficiency, financial growth and competitive advantage.

Benefits of Decarbonization: Beyond Environmental Sustainability

Companies that are leaders in decarbonization stand out for their ability to transform sustainability into concrete financial and reputational results. The benefits can be divided into two main groups:

1. Tangible benefits

• Reducing Operating Costs (44%): Strategies such as energy efficiency and the use of renewable energies allow companies to reduce significant energy and maintenance costs.

• Tax incentives (42%): Many governments offer tax benefits to organizations that adopt sustainable practices, reducing their tax impact.

• Increased Revenue (37%): Sustainable products and services attract new consumers, creating growth opportunities.

• Asset Enhancement (37%): Investments in sustainable technologies increase the intrinsic value of infrastructure and equipment.

2. Intangible benefits

• Improved Reputation (46%): Companies with a solid commitment to sustainability gain prominence among consumers, investors and other stakeholders.

• Regulatory Compliance (44%): Complying with environmental regulations reduces legal risks and protects against future more restrictive requirements.

• Supply Chain Resilience (42%): Sustainable practices make operations more robust in the face of global crises, such as pandemics or economic fluctuations.

• Attracting and Retaining Talent (34%): Professionals, especially the younger generations, prefer to work in organizations that share their environmental values.

‍

In addition, the study highlights that more than 50% of companies believe it is possible to decarbonize between 10% and 40% of their emissions with net savings. It is therefore a strategy that can bring direct and substantial economic gains.

This data reinforces that decarbonization is not only a corporate responsibility, but also a business opportunity.  

Why Bet on Decarbonization?

The pressure to adopt more sustainable practices comes from several fronts: Governments imposing stricter regulations, consumers demanding green products and services and investors prioritizing businesses with ESG (Environmental, Social, and Governance) criteria. In addition, the costs associated with climate change - such as infrastructural damage, increased operating costs and volatile energy prices - put even more pressure on companies to act.

But there is another side to this coin. Decarbonization has proven to be a highly profitable business opportunity. Data from the same study shows that 75% of corporate decarbonization initiatives generate positive economic value, often in less than three years. How can decarbonization generate economic value?

• Reduce costs: Solutions such as predictive maintenance and digital asset management help optimize operations.

• Increase revenue: Sustainable products and services become more attractive to conscious consumers.

• Market appreciation: Investors are increasingly looking for companies aligned with ESG criteria.

BCG data shows that leading companies report average annual earnings of 200 million dollars, showing that decarbonization can be a catalyst for positive transformation.  

Practical Strategies for Implementing Decarbonization in Your Company

In order for companies to take advantage of the benefits mentioned above, it is crucial to adopt a strategic approach, based on concrete actions.  

Main recommendations:

1. comprehensive carbon footprint measurement

The first step to reducing emissions is to understand where they come from. Measurement tools, such as those offered by Nextbitt, allow companies to identify sources of emissions throughout the value chain, including Scope 1 (direct operations), Scope 2 (purchased energy) and Scope 3(indirect emissions).

2. Investment in Energy Efficiency

Improving energy efficiency is one of the fastest and most effective ways to reduce costs and emissions. Some examples include:

• Replacing old equipment with more efficient versions.

• Installation of intelligent energy management systems.

• Implementation of LED lighting and modern climate control systems.

3. Adoption of Renewable Energies

Integrating renewable energy sources, such as solar and wind, into business operations not only reduces the carbon footprint but also protects against the volatility of fossil fuel prices.

4. Collaboration with suppliers

Supply chain emissions often represent the largest part of a company's carbon footprint. Establishing partnerships with suppliers to improve environmental practices is essential.

5. Sustainable Product Development

Innovating in the portfolio of products and services, creating solutions with a lower environmental impact, can not only attract new customers but also increase profit margins. According to BCG, sustainable products have 20% higher margins on average.

6. Use of Artificial Intelligence (AI)

AI makes it possible to automate processes such as emissions measurement, data analysis and impact forecasting. Companies that use AI are 4.5 times more likely to experience significant benefits.

7. Climate Transition Plans

Organizations that implement robust climate plans are 2.9 times more likely to profit from decarbonization and 3.3 times more likely to achieve global emission reduction targets.

How to Move Towards Decarbonization  

1. Adopt Comprehensive Measurement: Measure emissions throughout the value chain.  

2. Invest in Technology: Use AI and digital tools to automate processes.  

3. Collaborate with suppliers: Involve partners in reducing emissions.  

4. Innovate in the Portfolio: Develop products with less environmental impact.  

5. Implement a Climate Plan: Define a clear strategy with concrete targets and specific actions.  

Sustainability as a differentiating element

Despite the global slowdown, leading companies are proving that decarbonization can be a driver of financial growth and innovation. By combining fundamental actions and advanced technologies, these organizations are positioning themselves to lead increasingly demanding markets in sustainability.  

Nextbitt, with its expertise in sustainable asset management, is ready to support companies in this transition. With our technological tools, we help organizations measure, optimize and reduce their emissions accurately and effectively, ensuring not only regulatory compliance, but also significant financial and reputational benefits.  

Take the first step to lead corporate decarbonization!  

Talk to Nextbitt and find out how our solutions can transform your business and make it more sustainable.  

Contact us for a personalized presentation.

‍