The 2021 UN Climate Change Conference (COP26) held in Glasgow highlighted the urgent need for private sector engagement on climate action required to meet global net zero commitments. This requires cutting global carbon emissions in half by 2030, and a global temperature rise capped to a maximum of 1.5oC.
In order to assess the current state of corporate sector transitions, challenges of adopting transition plans, understanding financing needs, and sector specific assessments across oil & gas (O&G), power generation, steel, cement, and aviation, BNP Paribas commissioned Cambridge University to investigate the landscape through a survey of 53 corporates in hard to abate sectors. The Cambridge University Institute for Sustainability Leadership (CISL) ‘Understanding Corporates’ Transitions to Net Zero: Industry survey on net zero transition progress and challenges’ measured corporate transition across 24 countries around the globe between September and November 2021.
Dr Nina Seega, Research Director, Centre for Sustainable Finance at CISL, and co-author of the report, explained: “Corporate sectors play a key role in the transition of the economy to net zero. Our industry survey on the net zero transitions in the five ‘hard to abate’ sectors is an important step to understanding the progress and challenges of corporates’ transitions at a sectoral scale. Findings of this report are instrumental for the banking industry to better engage with corporate sectors in their transitions to net zero emissions.”
However, for some sectors, referred to as ‘hard-to-abate’, transitioning to a zero-carbon future is more than a challenge: it means a complete adaptation of their entire production, supply chain and core business strategies.
Among the key findings, the report, Understanding Corporates’ Transitions to Net Zero: Industry survey on net zero transition progress and challenges, shows that while a majority of companies have set net zero targets, they haven’t yet translated those targets into actions such as shifting investment and research into low carbon alternatives.
“The lack of reliable and affordable alternative low carbon technologies is found to be the greatest single challenge faced by companies surveyed to transition to net zero for all industries except the O&G sector” the study found.
Séverine Mateo, Head of the Low Carbon transition Group at BNP Paribas, noted: “BNP Paribas is fully engaged to support companies that are genuinely committed to transitioning to net zero on what will inevitably be a long and sometimes challenging journey. There will be no easy path, especially for the sectors that we have included in this important report, and all will need a long-term banking partner to support and help accelerate their transition.”
Key takeaways from the survey findings include:
- Net zero targets are starting to become a ‘new normal’ while this positive momentum still has a long way to go;
- Translating net zero targets into actions is urgently needed – progress so far of making capital investments in alternative low carbon businesses and technologies remains slow;
- The lack of reliable and affordable alternative low carbon technologies is found to be the greatest single challenge faced by companies surveyed to transition to net zero;
- Policy and regulation are widely viewed as the top transition risk driver, while the top physical risk driver depends more on a sector’s exposure and vulnerability;
- The financing needs for the surveyed ‘hard to abate’ corporate sectors to achieve net zero are immense while most of the sectors surveyed note that it is difficult to obtain finance from external sources to support the net zero transition.
To find out more and download the report, please visit