Key trends will shape business climate action in 2025

This article is sponsored by Environmental Defense Fund.

Recent news headlines make it appear that companies have retreated from net zero commitments, but the data reveals a bigger picture. A new analysis from Environmental Defense Fund’s Net Zero Action Accelerator shows that corporate climate action is in fact happening and outlines significant business opportunities for the future.

While “greenhushing,” a trend in which companies intentionally do not publicize their climate actions and goals, is on the rise, many companies continue to make progress on their climate initiatives because it makes business sense.

Of the 23,000-plus companies reporting emissions data to CDP, many have demonstrated real progress. For example, 25 percent of reporting companies have a climate transition action plan (CTAP). Additionally, over 60 percent of the largest companies in the Financial Times Stock Exchange are on track or close to reaching their targets. In 2023, corporate clean power purchasing jumped by 12 percent as companies took advantage of lower clean energy prices.

Now we need corporate climate progress to accelerate. EDF’s Net Zero Action Accelerator identified the following key trends for 2025 that will define climate leadership.  

1. The new economics of climate change – benefits outweigh the costs

Climate change is expensive, and costs are expected to further increase. Each new billion-dollar weather disaster raises the cost of insurance and goods — and increases supply chain volatility. In fact, climate change is expected to cost $38 trillion in damages per year by 2050, while immediate action could supercharge the global economy by $43 trillion over that time. Acting now can help companies mitigate risk across their value chain, reduce operational and energy costs, reduce future costs from damage control, and gain market share in the net zero economy.

One example of the financial benefits of climate action is the transition to cleaner energy.

The solutions for cleaner energy are getting cheaper, while risk mitigation benefits grow. Cleantech costs fall by approximately 20 percent for every doubling in deployment. These costs have fallen by up to 80 percent over a decade. Companies have a major opportunity to continue to lead in clean energy investment, to realize savings and help continue to drive down future costs.

Regulatory risks will further increase costs for companies as we approach 2030 climate deadlines. Climate reporting is increasingly mandatory, with many countries already vastly expanding emissions transparency to nearly half of the global economy.

2. Action matters most. Net zero commitments are only the first step.

The year 2025 will mainstream emissions reporting for large companies around the world. But there is a difference between disclosure and real climate action. Fortunately, there are copious examples demonstrating the benefits of pushing beyond disclosure to reap the financial benefits of climate action:

• Target emissions in the supply chain. Tools such as the Supplier Cascade help companies prioritize and simplify action on cutting gigatons of emissions.
• Decouple growth from emissions. A new study found eight leading European companies across sectors slashed emissions while boosting their bottom lines.
• Save on costs. Companies have saved millions of dollars by reducing water use, switching to renewables, cutting waste and finding new efficiencies.
• Take advantage of an influx of public climate funding. The Inflation Reduction Act added $400 billion of business incentives.
• Immediate action will pay global dividends. We are on a trajectory for 2.5 degrees Celsius. Insufficient action on the climate crisis could cost $178 trillion in economic value globally by 2070, while immediate action could supercharge the global economy by $43 trillion over that time.
• Attract and retain top talent. Talented employees want to help; 80 percent of global employees are ready to take climate action in their jobs.
• Attract investment. This is good business: 3 out of 4 investors believe environmentally responsible companies are more likely to succeed financially.

3. ‘Power Moves’ will define climate action in 2025 

Companies can demonstrate climate leadership with key actions. EDF’s Net Zero Action Accelerator identified five areas of impact:

• Make a Climate Transition Action Plan (CTAPs). A CTAP is the ultimate roadmap to achieving both business and climate goals. Today one in four companies (5,906) disclosed having a 1.5C-aligned climate transition plan through CDP last year, a 44 percent increase from 2022. However, only 40 percent of these companies have disclosed the data needed to judge a credible plan. Companies should follow international best practices for developing a high-quality, integrated and robust roadmap.
• Invest in the transition. Businesses should be devoting funding to the net zero transition and nature beyond their direct operations and value chains. High-integrity carbon credits – which are becoming easier to identify – are one way to do so.
• Align public policy advocacy. Companies need to support public policies to drive change at scale.
• Prioritize the just transition. Companies can increase the durability of their business and reduce legal and regulatory risk by working to create a low-carbon future that is just, equitable and informed by stakeholders.
• Develop nature-positive climate action. Working with nature, not against it, helps to meet climate goals while ensuring resources for the future.

By following these recommendations for a more holistic strategy to accelerate progress toward net zero, companies can also position themselves for success in a rapidly changing world. A successful sustainability strategy is about embracing opportunities, mitigating risks, and driving forward the innovation and creativity that business is known for.

These new insights emphasize that there is a lot more to be done. While companies are making strides, the global climate transition is still misaligned with the Paris Agreement. But there is a clear way forward. While many companies are leading, others need to pick up the pace. The Net Zero Action Accelerator’s free tools can help companies identify and prioritize the most important climate actions to take today.