This week’s reading time: 7 minutes & we have a new spotlight, see below

Welcome to another edition of The Green Executive Briefing. In under 10 minutes, you’ll be fully updated on the latest happenings in Sustainability and ESG every Tuesday at 8am EST. 🌎

We sift through a vast array of articles and data from trusted sources, distill the information, and present it to you in simple, bite-sized pieces every week. 🌍

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Here are some key takeaways:

• Only 12% of listed companies are aligned with a 1.5°C pathway

• 61% of companies remain aligned with warming above 2°C

• Corporate climate commitments continue to grow, with 60% of listed companies having published climate goals

• The quality of targets is improving, with 14.2% now having science-based targets (up from 9% a year ago)

More Readings

1. https://the-green-executive-briefing.beehiiv.com/p/five-fields-to-launch-your-sustainability-career

2. https://the-green-executive-briefing.beehiiv.com/p/navigating-the-sustainability-revolution-how-post-scarcity-economics-will-transform-business

3. https://the-green-executive-briefing.beehiiv.com/p/policy-shifts-legal-battles-market-impacts

🌟 Spotlight: Shaping Sustainability & Elyssa Pergola

Shaping Sustainability continues to make waves in the sustainability sector with their mission to build a connected community of professionals driving collective action. Through shared knowledge, resources, and relationships, they empower changemakers across industries to turn climate ambition into real-world impact.

Here is the website: https://shapingsustainability.com

Their Slack group has become a vital hub for sustainability professionals looking to collaborate, share insights, and create meaningful change. With a growing member amount, this New York-based non-profit is quickly becoming an essential network for anyone working in the sustainability space. Contact Elyssa below if you would like to join.

This month, we're excited to spotlight Elyssa Pergola, a rising star in sustainable development. Elyssa brings valuable expertise as a Sustainability Manager at Everest, where she contributes to the company's ambitious sustainability initiatives.

Elyssa exemplifies the kind of cross-industry collaboration that Shaping Sustainability promotes—connecting corporate sustainability practices with academic research to develop innovative approaches to our most pressing environmental challenges.

Connect with Elyssa on LinkedIn to learn more about her work and perspectives on building a more sustainable future.

Follow & contact Elyssa on LinkedIn here.

Want to get featured in the spotlight? Reply to this email: [email protected]

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Intro

🌍 Climate Finance Tracker: Ambition Rising, Alignment Lagging

The latest MSCI Transition Finance Tracker has been released, revealing a mixed picture of progress in the corporate climate transition. While ambition and capital deployment are accelerating, we're still far from the trajectory needed to meet Paris Agreement goals.

Key Takeaways

• Only 12% of listed companies are aligned with a 1.5°C pathway

• 61% of companies remain aligned with warming above 2°C

• Corporate climate commitments continue to grow, with 60% of listed companies having published climate goals

• The quality of targets is improving, with 14.2% now having science-based targets (up from 9% a year ago)

Main

📌The Emissions Gap

Global corporate emissions trajectories remain misaligned with climate goals. Only about 12% of listed companies are on track to limit warming to 1.5°C above preindustrial levels, while 61% are currently aligned with more than 2°C – including nearly a quarter that would drive over 3°C of warming.

There are encouraging signs in developed markets, where we're seeing the beginning of decoupling between economic growth and emissions:

From 2015 to 2023, listed companies in developed economies grew revenues by about 49% even as their emissions fell nearly 25%, showing that growth need not equal higher carbon output. However, emerging markets have not yet achieved this decoupling, with economic expansion still closely tied to rising emissions.

Main

📌Corporate Climate Commitments: Quality Over Quantity

While the overall percentage of companies with climate commitments has plateaued at around 60%, we're seeing significant improvement in the quality and rigor of these targets:

14.2% of companies now have a science-based emissions reduction target validated by the SBTi (Science Based Targets initiative), up from only ~9% a year earlier. These SBTi-approved targets are considered a gold standard, because they ensure a company's pledged reductions align with limiting warming to 1.5°C.

Additionally, nearly 29% of companies have announced net-zero targets for mid-century (though not all are grounded in science).

Climate ambition varies significantly by sector:

Companies in heavy industries are among the leaders in adopting science-based targets – the industrials sector has the highest share of firms with SBTi-validated goals, followed by consumer discretionary and IT. This reflects both stakeholder pressure on high-emitting sectors and recognition within those industries that transforming now is key to staying competitive.

Main

📌 Disclosure Progress

Transparency in climate reporting continues to improve:

As of the latest data, 71% of listed companies now report their Scope 1 and 2 greenhouse gas emissions, up from 68% the year prior. Likewise, disclosure of value-chain (Scope 3) emissions – which are often much larger – has risen to 46% of companies (from 41% a year earlier).

However, gaps remain:

Nearly 30% of public companies still do not disclose even basic Scope 1–2 emissions, and a majority do not reveal their Scope 3 impacts. The gap is even larger for private companies: overall, far fewer unlisted firms report their emissions, largely because they face less regulatory and investor pressure than publicly traded peers.

Global standardization is on the way:

Climate reporting is rapidly becoming standardized worldwide – countries across most regions are rolling out mandatory sustainability disclosure rules aligned with global standards. For example, jurisdictions from Brazil to Singapore and Australia have announced requirements for companies to report comprehensive GHG emissions and climate risks in line with the new ISSB (International Sustainability Standards Board) guidelines, with phased timelines starting as early as 2024–2026.

Main

📌 Transition Finance Flows

The financial system is increasingly mobilizing to fund decarbonization, but with interesting nuances:

Dedicated "climate transition" investment funds – across asset classes – are actively directing money into high-emitting sectors to spur their transformation. In fact, these transition-oriented funds intentionally carry a high carbon footprint: their portfolio carbon intensity is nearly 5× that of more restrictive "Paris-aligned" funds. This higher intensity is by design – it reflects a strategy of investing in emissions-intensive industries (like power, steel, and cement) with the goal of financing cleaner technologies and emissions reductions in those sectors.

Private capital is taking on the harder transition challenges:

Private equity and infrastructure investors, in particular, are leaning into brown-to-green opportunities. Private climate-focused funds now allocate about 40% of their assets to the heavy-emitting utilities sector, compared to just 8% exposure to utilities in public equity climate funds. In other words, private capital is taking on the hard yards of converting coal-heavy power generators to renewables and financing new clean energy in grids.

Main

📌 Carbon Markets as Transition Finance

Carbon trading is emerging as a key mechanism in climate finance:

According to the MSCI Tracker, the voluntary carbon credit market is channeling capital from developed to emerging economies and providing private-sector finance for nature at an accelerating rate. Companies purchase carbon credits – each typically representing one ton of CO₂ reduced or removed – to offset portions of their emissions, effectively directing funds into climate mitigation projects worldwide.

Most corporate carbon credit usage focuses on emissions reduction rather than removal:

In 2024, roughly 70% of the credits retired by companies were reduction credits, versus 30% removal credits. Moreover, the vast majority (99%) of those removal credits came from nature-based solutions – for example, reforestation, soil carbon sequestration, or wetland restoration – with only a tiny fraction from engineered carbon removal methods.

Main

📌 Physical Climate Risks

As companies work to reduce emissions, they must also contend with escalating climate impacts:

Even as companies work to cut emissions, they must grapple with the here-and-now impacts of a changing climate on their operations. The Transition Finance Tracker underlines that physical climate risk is rising sharply. Corporate facilities in numerous major cities – from Miami and New York to Osaka, Pune, São Paulo, and Riyadh – rank in the top quartile globally for exposure to hazards like flooding, extreme heat, wildfires, and severe storms.

These risks are increasingly material to business operations:

Businesses are already feeling the costs: production halts from floods, higher cooling expenses during heatwaves, supply chain disruptions from storms, and rising insurance premiums in high-risk areas. For example, factories in low-lying coastal regions might face frequent flood damage, while warehouses in wildfire-prone zones could see days of downtime due to air quality issues or evacuation orders.

WRAPPING UP

🔮 CLOSING THOUGHT: Strategic Outlook for Executives

For corporate sustainability leaders, the report suggests several strategic priorities:

1. Integrate Climate into Core Strategy

Companies must move beyond pledges and embed climate targets into operational decision-making. This means setting science-based targets, retooling business models for low-carbon products, and phasing out high-emitting assets. In practice, firms should treat their decarbonization roadmaps as critical business plans – with board oversight, dedicated budgets, and transparent progress tracking – to ensure they are on a credible trajectory toward net-zero.

2. Leverage Transition Finance Proactively

With capital flowing into green and transition investments, there is an unprecedented opportunity to fund climate solutions. Businesses should tap into green bonds, sustainability-linked loans, and transition-focused funds to finance upgrades like renewable energy installations, fleet electrification, or R&D in clean technologies. High-emitting sectors in particular can seek partnerships with private equity or infrastructure investors who are eager to fund emission reductions.

3. Prepare for Evolving Policy and Disclosure Standards

The regulatory landscape on climate is tightening. Firms should prepare for incoming mandatory disclosure regimes (ISSB-aligned reports, TCFD requirements, SEC rules, etc.) by improving data management and scenario analysis capabilities now. Likewise, they should anticipate policies such as carbon pricing, emissions caps, or stricter efficiency standards, which are likely to expand in major economies.

4. Build Climate Resilience

Given the rise in physical risks, companies should conduct thorough climate risk assessments across their assets and supply chains, then implement adaptation measures. This could involve relocating at-risk facilities, diversifying suppliers, reinforcing infrastructure, and establishing emergency response protocols. Importantly, businesses should disclose these risks and their mitigation plans to investors, turning resilience into a point of confidence rather than vulnerability.

5. Embrace Collaboration for a Just Transition

No entity can solve the climate challenge alone. Public-private collaboration is essential to direct capital where it's needed most – such as scaling clean energy in emerging markets or developing breakthrough technologies like green hydrogen and carbon removal. Companies, investors, and governments should work together through initiatives and financing platforms to ensure a just transition – helping fossil-fuel-dependent regions diversify and workers reskill into green jobs.

P.S. When you’re ready, here’s how I can help you:

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   1. GHG Accounting Strategies (Scope 1, 2 & 3) 

   2. ISO 14001 Compliance (Environmental Management)