#USA #New York #Corporate Sustainability #Net Zero #Risilience

Corporations Embrace Sustainability in Capital Expenditure

In a noteworthy shift towards sustainability, recent research from Risilience reveals that the world's leading businesses are increasingly redirecting their capital expenditures to align with sustainability objectives. On average, 36% of all capital expenditures are now invested in projects aimed at achieving net zero. This dramatic change represents a fundamental rethinking of corporate strategies as firms address climate and nature risks more seriously than ever before.

The study, which surveyed senior executives in sustainability and finance across the US, UK, and Europe, examined how multinational corporations with annual revenues ranging from $700 million to more than $50 billion are integrating sustainability into their core business strategies. The survey, titled "Climate and Nature Risk 2025," finds that over half (52%) of these organizations now have a well-defined roadmap for achieving net zero emissions, and a further 30% are in the midst of developing their own strategies.

Interestingly, the research indicates a robust trend of increased investment in sustainability initiatives, with 88% of firms confirming that they are allocating more resources towards net zero strategies despite the persistent geopolitical and economic instability affecting global markets. Moreover, among the organizations developing decarbonization plans, 75% are now including forecasts for returns on investment, indicating a critical move from mere ambition to actionable, financially substantiated goals.

Andrew Coburn, CEO of Risilience, emphasizes the significance of capital allocation as an indicator of corporate intent, stating, "When over a third of corporate CapEx is aligned with sustainability goals, it illustrates that leading businesses are embedding sustainability into their governance, strategy, and financial frameworks instead of merely experimenting with net zero initiatives."

The survey results further underscore the integration of climate and nature risks at the board level, as 95% of companies report that these issues are consistently discussed in board meetings, with many doing so on a frequent basis. Despite facing increased uncertainty due to a volatile geopolitical landscape, the vast majority—90%—of surveyed businesses feel compelled to heighten their investment in climate strategy as a priority area.

Upon reflection of industry trends, consumer-focused sectors such as fashion, food, and retail have emerged as frontrunners in embedding sustainability risk within their decision-making processes. However, challenges particularly related to Scope 3 emissions—emissions that occur in the supply chain—continue to pose obstacles, mainly due to misaligned incentives and inadequate supplier data quality.

As corporate sustainability strategies become more advanced, nature risk management is rapidly being recognized as an essential component. The research indicates that 75% of companies already have some form of nature risk plan, with over a third (37%) piloting disclosures aligned with the Taskforce on Nature-related Financial Disclosures (TNFD). Although issues such as unclear leadership roles and insufficient investor pressure persist, the findings point to a clear trend indicating that nature considerations are becoming increasingly integrated into the agendas of sustainability and finance leaders, similar to climate risk.

Coburn asserts that the evolution of climate and nature risks into critical financial considerations underscores the importance of companies acting decisively. By quantifying these risks and embedding them within their governance and financial frameworks, businesses can enhance their resilience and gain a competitive advantage in an uncertain economic environment. Those that lag in this regard may soon find themselves facing escalating pressures from investors, market participants, and regulators as the pace of sustainability expectations accelerates.

In conclusion, the Risilience study highlights a significant and positive movement in corporate capital allocation towards sustainability and underscores the importance for companies to transition into a net-positive economy. By leveraging actionable insights and frameworks, organizations can not only achieve their environmental goals but also ensure long-term business viability and stakeholder value.