Analyst Insight: Despite the potential rollbacks or simplifications of climate regulations, companies are continuing their sustainability efforts because they recognize emissions management as a strategic business opportunity. Data-driven carbon management enables organizations to identify supply chain vulnerabilities, reduce costs, and position themselves for long-term success in a low-carbon economy.

The future of climate regulations is uncertain, and some politicians have villainized climate action. But most companies are plowing ahead with sustainability efforts anyway. 

Optera’s 2024 Trends in Corporate Emissions Management Report found that 91% of companies already report carbon emissions data, either publicly or to regulators and customers. A separate global survey found that 85% of respondents will proceed with their emissions disclosure plans regardless of political action in their country. 

In Optera’s survey, the top motivator for tackling corporate emissions was the opportunity for product or brand differentiation. About 37% of respondents ranked that first, compared to only 11% who considered regulatory penalties their main driver. 

These responses indicate most companies understand that emissions reporting is about more than fulfilling reporting obligations and avoiding fines. Based on this data and my conversations with customers, we are unlikely to see a dramatic drop in corporate sustainability programs despite regulatory pullbacks. 

While the depth and scope of reporting may plateau or shift, sustainability departments remain active. These initiatives are critical to building a resilient business positioned for long-term success.

Decarbonization as a Business Strategy

Sustainability investments make business sense. McKinsey estimates companies that fail to decarbonize could experience a 20% profit reduction by 2030 due to stranded assets, higher capital expenses and diminished market share. 

Some sustainability initiatives deliver immediate cost savings. For example, in some regions, renewable energy sources are cheaper than fossil fuels, with the added benefit of de-risking the supply chain. 

Carbon reduction also satisfies market demands. Consumers and investors want to see sustainability initiatives, even if governments do not. Consumers and corporate buyers are willing to pay a premium for sustainable products and services. While investors have pulled back on public climate advocacy, they still recognize sustainability as a long-term profitability indicator. The global survey found 97% of investors are more likely to invest in companies with assured reporting. 

What do businesses need to make — and prove — meaningful carbon reductions? Data. Calculating emissions, whether legally required or not, provides the critical information to drive and measure decarbonization progress.

The Value of Measuring Emissions 

Forward-thinking companies recognize emissions reporting as a business opportunity rather than a checkbox. Measuring value chain emissions empowers organizations to map and address supply chain vulnerabilities, including suppliers, products or processes with long-term risks related to climate change and the transition to a low-carbon economy. 

And it’s actual emissions activity data that’s needed, not just industry averages. Companies that rely on spend-based or average emissions assumptions limit their ability to drive meaningful reductions. This data is subject to volatility and inaccuracy. Case in point: Impending tariffs will increase supply chain spend, resulting in an artificial increase in reported emissions. This skewed data obscures true risks and prohibits companies from tracking progress. 

Actionable insight requires supplier- and product-specific emissions data. Businesses must begin collecting this information from their value chain partners. But de-risking the supply chain goes beyond measuring emissions. Successful companies will invest in carbon management too. This approach analyzes emissions data to deliver insights that inform strategic decisions. Organizations can identify areas for improvement and prioritize decarbonization initiatives that align with both their environmental goals and business objectives.

For example, if a single supplier contributes a disproportionately large share of emissions, this could signal over-reliance on this partner, or production inefficiencies that drive up costs. Evaluating this data allows companies to remedy the situation by diversifying vendors or engaging with the supplier to improve processes. 

Unfortunately, the regulatory uncertainty may slow action from some organizations with newer climate programs. However, many companies are already deeply invested in sustainability, and have proven the business case, making it unlikely that they will scale back. 

By 2030, we will see a growing divide between companies that embraced emissions reduction as a competitive advantage and those that stalled due to short-term uncertainty. Businesses that proactively measure and manage emissions — not just report them — will be better positioned to handle the impacts of climate change and make a smooth transition to the low carbon economy.