Top three decarbonization priorities for organizations in 2025
As the world shifts toward a low-carbon future, decarbonization is no longer just a buzzword—it's a business imperative. Organizations across industries and sectors are taking meaningful steps to reduce their environmental impact and position themselves for a sustainable future.
Governments worldwide are increasing pressure to drive decarbonization in industries through evolving regulations. Leading the way, the European Union (EU) has introduced the Carbon Border Adjustment Mechanism (CBAM), currently in its transitional phase. CBAM seeks to level the playing field on emission charges for carbon-intensive products like steel, aluminium, cement, and fertilizer, aligning those from outside the EU with the EU-ETS charges within the EU. As regulatory demands grow alongside pressure from customers, regulators and investors, decarbonization is emerging as a top priority for organizations across sectors, pushing them to reduce their carbon footprints.
In late 2024, I spoke at the MENA Green Steel Summit in Dubai, UAE. During the event, I engaged with the audience of business leaders and decision-makers, asking them to highlight their organization’s top three decarbonization priorities for 2025. Below are the top three decarbonization priorities identified for the coming year:
1. Taking active measures to lower carbon footprint (24% of total votes)
The highest priority for organizations in the next 12 months is implementing concrete actions to reduce their carbon emissions. This reflects a shift from merely setting goals to actively executing decarbonization strategies. Whether through energy efficiency improvements, transitioning to renewable energy, electrifying fleets, or optimizing operations, companies are now focused on cutting their carbon footprint across the board.
There are many ways in which organizations can decarbonize their operations and make their value chains more sustainable, including:
- Renewable energy transition: Moving to renewable energy sources, such as solar or wind, is a critical step many companies are taking. This could involve on-site renewable energy generation or purchasing renewable energy credits (RECs).
- Energy efficiency upgrades: Retrofitting buildings, upgrading to energy-efficient machinery, and adopting smart energy management systems are key initiatives.
- Electrification of fleet and operations: Companies are beginning to electrify their vehicle fleets and industrial operations, reducing reliance on fossil fuels.
This focus is driven by increasing pressure from regulatory bodies, customers, and investors who expect measurable progress in lowering emissions. As climate regulations tighten, and public awareness grows, reducing the carbon footprint has become not only a moral obligation but also a business imperative.
2. Measuring and verifying the carbon footprint (16% of total votes)
Before organizations can effectively reduce their emissions, they need a clear understanding of their current carbon footprint. Measuring and verifying emissions is the second top priority for the next year. This involves collecting data on greenhouse gas (GHG) emissions across all scopes (Scope 1, 2, and 3) and ensuring the accuracy of that data through verification processes.
Gathering this data is incredibly important, particularly because of:
- Regulatory compliance: Governments are increasingly requiring companies to disclose their emissions. Proper measurement and verification ensure that organizations meet these requirements and avoid potential penalties.
- Identifying key emission sources: Once a company accurately measures its carbon footprint, it can better identify which areas of its operations contribute the most emissions and target those for reduction efforts.
- Investor and stakeholder trust: Accurate carbon accounting builds trust with investors, customers, and other stakeholders, proving that a company is serious about decarbonization.
Without solid, verifiable data, it’s impossible to measure progress or make informed decisions about where to invest in reducing emissions. For many companies, the next 12 months will be dedicated to fine-tuning their emissions tracking systems, embracing digital tools, and working with third-party verifiers to ensure transparency.
3. Turning sustainability into a competitive advantage (12% of total votes)
Sustainability is no longer just a compliance issue; it’s becoming a strategic differentiator. Organizations are increasingly viewing their decarbonization efforts as an opportunity to gain a competitive advantage. Whether by attracting eco-conscious consumers, reducing long-term operational costs, or securing sustainable finance, companies are leveraging sustainability to stand out in the market.
Ways sustainability can drive competitive advantage include:
- Brand reputation: Consumers are increasingly choosing brands that prioritize sustainability. Companies that can showcase their sustainability credentials are likely to attract and retain more customers.
- Operational efficiency and cost savings: Many sustainability measures—such as improving energy efficiency or reducing waste—also lead to cost savings. By cutting costs while enhancing sustainability, companies can improve profitability.
- Access to green finance: Sustainable finance, including green bonds and sustainability-linked loans, is gaining traction. Organizations that demonstrate strong environmental performance may have access to more favourable financing options, which can provide a competitive edge.
By turning sustainability into a competitive advantage, organizations are not only contributing to global climate goals but also positioning themselves as leaders in a marketplace that increasingly values environmental responsibility.
What about other priorities?
While the top three priorities—reducing the carbon footprint, measuring emissions, and turning sustainability into a competitive advantage—are leading the charge, other areas are gaining traction. Cutting costs and improving efficiency (12%) continues to be a critical focus, as businesses seek to balance decarbonization with financial performance. Meanwhile, securing sustainable finance (11%) to fund green initiatives is becoming more important, alongside efforts to ensure social and supply chain sustainability (7%).
Target setting (7%), digital data collection (6%), and reporting progress (3%) are also key activities that enable companies to track and communicate their progress, though they fall lower on the list compared to direct carbon-reduction actions. Finally, only 2% of organizations are prioritizing a “business as usual” approach, underscoring the fact that most businesses recognize the need for immediate action in the face of climate change.
Navigating the path ahead
The path to decarbonization is multifaceted, and each organization’s approach will vary depending on its industry, resources, and long-term goals. However, what is clear is that companies are taking decisive action to reduce their carbon footprint, backed by accurate measurement, sustainable finance, and a focus on making sustainability a business advantage. The next 12 months will be critical for organizations looking to not only meet regulatory demands but also position themselves as leaders in the transition to a sustainable future. The organizations that succeed in decarbonizing effectively are not only contributing to global climate efforts but also setting themselves up for long-term success in a rapidly evolving business landscape.
What more can you learn from industry leaders?
How can businesses build ‘lean and green’ supply chains? How can they be equally committed to sustainability and cost efficiency without compromising either?
To find out, we surveyed 525 decision-makers in supply chain and procurement, sustainability, regulatory affairs, and digital transformation. Their responses reveal that digitalization means companies no longer need to choose between ‘lean’ and ‘green’.
The report dives into several crucial issues underpinning the challenges related to supply chain sustainability and provides valuable insights to empower information-based decision making for stakeholders on how to build ‘lean and green’ supply chains. Download the report to learn more.
2/3/2025 2:30:00 PM