There is a rising trend amongst European businesses regarding decarbonization transparency and commitments – with a 56% increase in emissions disclosures to CDP over the past three years. However, they are also struggling to set impactful actions for important emissions hotspots, with just 37% of Scope 3[1] emissions currently being covered by decarbonization measures. This is according to a new joint research study from Capgemini Invent, and non-profit CDP released today, ‘From Stroll to Sprint: A race against time for corporate decarbonization’, which analyzes the corporate decarbonization strategies in Europe across 17 sectors, and how they have evolved between 2019 and 2022.

A persistent gap remains between transparency and action

The overwhelming majority (92%) of emissions disclosed by European companies in 2022 were Scope 3, with the use of sold products (57%) and purchased goods and services (17%) cited as companies’ key hotspots. There was a 28% increase in Scope 3 categories disclosed to CDP in 2022, as compared to 2019.

Almost half of emission reduction targets approved by SBTi

The study finds that 47% of companies reported having absolute emissions reduction targets approved by the SBTi, compared to just 14% in 2019. However, SBTi-approved absolute targets cover only 13% of the total greenhouse gas emissions disclosed by companies to CDP in 2022. This reinforces the urgent need for the companies with the highest emissions impact to set robust reduction targets aligned with 1.5°C pathways[2].

Credible net-zero targets are still in their infancy despite rapid uptake, with only 8% of companies reported having set net-zero targets approved by the Science Based Targets initiative (SBTi), and a further 14% with their targets pending validation. Although the number of companies disclosing to CDP has grown significantly, 23% of companies still lacked any emissions reduction targets in 2022.

“Our analysis reveals that although some fast progress has been made by leading companies, particularly on science-based target setting, the majority need to take more decisive action to address their Scope 3 emissions quite promptly,” comments Maxfield Weiss, CDP Europe Executive Director. “With the urgent need to align corporate decarbonization with the 1.5°C limit, companies need to set out clear climate transition plans now that will deliver the reduction we need to keep our economy and society safe.”

Roshan Gya, CEO of Capgemini Invent and Member of the Group Executive Committee said, “As companies seek to achieve their net-zero goals, it’s imperative for them to set both short- and long-term targets to monitor their decarbonization journeys. New technologies such as low carbon hydrogen and process electrification will need to be implemented at a massive scale. This requires a shift in the regulatory policies and an innovative approach in order to enable the dual transition towards a sustainable and digital economy.”

Renewable energy offers significant untapped potential

The report finds that overall companies are making progress in reducing the environmental impact of their operations, with up to 40% reduction in Scopes 1 & 2 emissions achieved mostly through energy efficiency measures. Today, sectors relying on electricity have more opportunities to decarbonize their energy mix and protect themselves from energy market price fluctuations than others.

In 2022 renewable energy covered less than a third of the energy used in the vast majority (70%) of sectors analyzed, suggesting that there are still major reductions in emissions to come through sourcing renewables.

Action on sustainability does not hamper competitiveness

As organizations increasingly adopt decarbonization actions as part of sustainability strategies, the data disclosed to the CDP reveals that these investments did not impede the ability to grow turnover. From 2019 to 2022, reported Scope 1 and 2 emissions dropped in most sectors by an average of 14% whilst revenues increased 8%.