Over 60% of the world’s largest companies have already set carbon reduction targets. And corporate leaders realize it’s not about if a green transition will occur, and it’s not even about when—it’s about how fast the green transition will happen.
Governments and financial regulators are increasingly demanding that companies be more transparent about how they are managing climate-related risks in capex decisions, which can have significant implications for shareholder value. The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommends that companies use scenario analysis to weigh the business implications of climate change, including investment projects, so risks can be priced into the market.
The problem is that many companies make capex decisions based largely on financial considerations. For companies that want to maintain their carbon competitiveness and license to grow, failing to integrate green transition metrics into the business case creates significant blind spots.