WEBVTT 00:00:00.000 --> 00:00:03.240 I'm Joel Makower talking to Diana Dimitrova from BCG about a 00:00:03.240 --> 00:00:05.040 new report about decarbonization. 00:00:05.280 --> 00:00:07.760 Diana, this is the fourth year that you've done this report. 00:00:07.880 --> 00:00:09.800 What have you learned about where we are with 00:00:09.800 --> 00:00:12.200 decarbonization and how it compares with a few years back? 00:00:12.560 --> 00:00:13.400 Great to see you, Joe. 00:00:13.960 --> 00:00:15.680 Thanks so much for having me. 00:00:17.160 --> 00:00:20.240 So every year for the last four years, we've looked at about 00:00:20.240 --> 00:00:23.400 2,000 companies, or just under, that represent north of 40% of 00:00:23.400 --> 00:00:24.560 the emissions globally. 00:00:25.440 --> 00:00:28.560 So it tends to be a pretty good stocktaking on where we are. 00:00:28.720 --> 00:00:31.760 And unfortunately, we actually this year saw a decline across 00:00:31.760 --> 00:00:33.000 comprehensive measurement. 00:00:33.000 --> 00:00:36.520 So only 9% of companies comprehensively measure their 00:00:36.520 --> 00:00:39.400 Scope 1, 2, and 3. Their target setting—so, 00:00:39.400 --> 00:00:42.600 you know, how they align their targets—has also eroded. 00:00:42.880 --> 00:00:46.280 And most interestingly, only 11% of companies are reducing their 00:00:46.280 --> 00:00:49.400 emissions in line with what their ambitions were, which is, 00:00:49.400 --> 00:00:51.760 I think, about a 3 percentage point erosion. 00:00:51.760 --> 00:00:52.760 So it's another signal that perhaps some of the attention 00:00:52.760 --> 00:00:55.600 So it's another signal that perhaps some of the attention 00:00:55.600 --> 00:00:59.920 that's been put on it is not materializing yet in the figures. 00:00:59.920 --> 00:01:02.560 Nine percent in 2024 is not great. 00:01:02.560 --> 00:01:04.600 So what do you attribute the lack of progress? 00:01:05.000 --> 00:01:08.080 Look, it's a great question, and it's one that I hope we turn 00:01:08.080 --> 00:01:10.680 around, especially in light of COP 30 coming around the 00:01:10.680 --> 00:01:11.000 corner. 00:01:11.440 --> 00:01:14.320 In the short term, we've had some disruptions due 00:01:14.320 --> 00:01:17.440 to active wars, which has strained supply chains, and 00:01:17.440 --> 00:01:19.760 there's been a general cost sensitivity. 00:01:20.040 --> 00:01:23.600 And so I think for CEOs, it's mostly been the rising of other 00:01:23.600 --> 00:01:25.800 priorities near the top of their list. 00:01:26.640 --> 00:01:30.520 But I am very optimistic that decarbonization will be back in 00:01:30.520 --> 00:01:32.000 the top three very soon. 00:01:32.120 --> 00:01:35.160 Well, you talk about the cost, and one of the of findings is 00:01:35.160 --> 00:01:38.000 that there are some substantial benefits financially for 00:01:38.000 --> 00:01:40.000 companies that lead on decarbonization. 00:01:40.320 --> 00:01:43.360 Yeah, it's, it's one of my favorite, you know, spotlights 00:01:43.360 --> 00:01:46.800 of this year, because I think it makes it very real for companies 00:01:46.800 --> 00:01:48.920 that decarbonization isn't just a drain. 00:01:48.920 --> 00:01:52.440 So we found that 25% of companies who are leaders in the 00:01:52.440 --> 00:01:56.320 space actually make about 7% of their revenue in net benefits. 00:01:56.320 --> 00:01:57.400 So that's after their investment. 00:01:57.400 --> 00:02:00.960 So that's roughly $200 million. And $200 million is very healthy 00:02:00.960 --> 00:02:02.800 addition to anyone's bottom line. 00:02:02.960 --> 00:02:06.360 And that's what I think gets me on the train that managers will 00:02:06.360 --> 00:02:09.000 realize this and start to push in that direction. 00:02:09.600 --> 00:02:11.280 And often those things are coupled, right? 00:02:11.280 --> 00:02:13.520 So they end up decarbonizing and taking costs out of their 00:02:13.520 --> 00:02:13.920 businesses. 00:02:13.920 --> 00:02:16.640 We saw that as the leading reason of where they were 00:02:16.640 --> 00:02:17.800 generating the benefit. 00:02:18.120 --> 00:02:20.960 And so I think we'll see more and more in that direction. 00:02:21.120 --> 00:02:24.400 So what will it take for more companies to unlock those kinds 00:02:24.400 --> 00:02:25.000 of benefits? 00:02:25.360 --> 00:02:28.800 I think it's doing the business cases and making sure that they 00:02:28.800 --> 00:02:32.320 understand, OK, if we, you know, reduce our potentially physical 00:02:32.320 --> 00:02:35.720 footprint, what is the carbon that we take out as well as some 00:02:35.720 --> 00:02:37.360 of the cost elements around it. 00:02:37.360 --> 00:02:39.400 But those business cases could be really varied. 00:02:39.400 --> 00:02:41.920 It could be anything from upgrading your heating or 00:02:41.920 --> 00:02:44.440 changing some of the materials to go into a product. 00:02:45.200 --> 00:02:47.240 And so I think the opportunities are endless. 00:02:47.720 --> 00:02:50.160 One of the things you talked about in the report is the role 00:02:50.160 --> 00:02:51.200 of artificial intelligence. 00:02:51.560 --> 00:02:55.080 Do you see AI as a net positive or negative when it comes to 00:02:55.080 --> 00:02:56.000 decarbonization? 00:02:56.320 --> 00:02:58.240 So, AI is a net positive. 00:02:58.240 --> 00:03:01.760 I think technology in general, and then AI is an extension of 00:03:01.760 --> 00:03:05.720 that, really just makes things faster and shortcuts certain things, 00:03:05.720 --> 00:03:07.360 it does make the ability to 00:03:07.360 --> 00:03:11.080 measure your baseline or to prioritize levers just 00:03:11.080 --> 00:03:11.800 much faster. 00:03:12.160 --> 00:03:15.680 And so it can get those business cases we just talked about on 00:03:15.680 --> 00:03:16.960 the table much quicker. 00:03:16.960 --> 00:03:19.880 And then you can just start to make decisions on that as a manager. 00:03:19.880 --> 00:03:21.600 So lots more opportunity. 00:03:21.760 --> 00:03:22.760 Thanks so much, Diana. 00:03:22.760 --> 00:03:23.640 Great to see you, Joel.