How to Track and Address Climate Progress Gaps

California Climate Regulations are coming, yet guidance for companies in scope is slow to develop. FSI Consulting has put together a list of actions that companies can take today, that will prepare them for what will likely be a shortened runway for compliance. If you and your company are struggling with CA readiness and where to start, here are 5 no regret actions you can start taking towards compliance: 1- Engage with Key Stakeholders and Determine Overall Approach  Start by assembling a cross-functional team (Sustainability, Finance, Legal, Operations) to manage and support efforts. Work as a team to secure executive and Board-level buy-in while ensuring adequate resources and oversight. Investigate options to keep work in-house or engage with a consultant to calculate GHG emissions and/or prepare a climate risk report.   2- Start Compiling Climate Risk Data  Compile a list of potential physical risks (floods, fires, heat, etc.) to facilities, and research potential transition risks (carbon pricing, regulations, market changes, etc.) based on your organizational boundaries. Think about and identify internal climate risk governance activities and collect relevant metrics and targets for evaluating climate risk mitigation activities. Review peer companies’ climate risk reports in the public domain.   3- Evaluate GHG Emissions Inventory Reporting Readiness  Conduct an internal review of current GHG inventory processes (with future attestation in mind), assess data quality management systems and identify reporting gaps versus requirements.   4- Engage Third-Party Assurance Provider for GHG Emissions Inventory  Select and onboard a qualified verification body and get early feedback on data collection processes and controls.   5- Review Climate Strategy Documentation  Assess current climate commitments and targets, identify gaps in current documentation and create a clear paper trail for compliance purposes.

What's going to close the $7 trillion gap in climate finance? One of my favorite reports each year from Climate Policy Initiative has some ideas for scaling the investments needed to align with a net-zero pathway. To my mind, this is the best report each year on the state of climate finance. It shows you: -Where financial flows are going from (across public and private sources) -Where money is going to (in industry, location, and activity) -What our estimated needs are across sectors and regions -The mitigation potential to unlock across sectors -Strategies for scaling both public and private investment. Here's a look at the sector gaps we are seeing to date and how they can be overcome. Energy systems- need a 2.5-fold increase in mitigation finance to align with average 2024 to 2030 needs. This sector has the highest emissions reduction potential, requiring investment in renewables, grid modernization, and storage solutions. Transport- also requires an almost 2.5-fold increase in mitigation finance, alongside a significant shift away from high-carbon investments. With a mitigation potential of 3.2 GtCO2e, priorities include electric mobility, public transport expansion, and freight decarbonization. Buildings and infrastructure- mitigation finance must rise nearly 4-fold. This is sector is generally climate-aligned, but further investment can realize its 3.2 GtCO2e mitigation potential. Focus areas include efficiency upgrades, sustainable construction, and low-carbon heating and cooling. Industry- a nearly 24-fold mitigation finance increase, along with reallocation from high-carbon activities, is needed to tap the sector's 4.4 GtCO2e abatement potential. Key areas include clean hydrogen, low-emission manufacturing of cement, steel, and ammonia, and carbon capture, and storage. AFOLU- holds great untapped emissions reduction opportunities—mitigation flows should increase 64-fold from USD 18 billion to USD 1,170 billion annually through 2030 to realize this potential. There is also a need to improve definitional boundaries and enhance tracking of finance flows to this sector. Check out the full report here along with the data and dozens of interactive charts: https://lnkd.in/esqBmpfe #climatefinance #climateinvestment #netzero #decarbonization #climatepolicy #climateaction #emissions

Is #TransitionFinance funding the right areas at the scale and speed needed? 2024 showed us a conflicting reality: record emissions, surging #climatepolicies, and uneven investments. Let’s break down what the data is telling us (thanks to Nat Bullard’s compelling presentation): 1️⃣ 𝘙𝘦𝘤𝘰𝘳𝘥 𝘌𝘮𝘪𝘴𝘴𝘪𝘰𝘯𝘴 𝘈𝘮𝘪𝘥𝘴𝘵 𝘙𝘦𝘤𝘰𝘳𝘥 𝘐𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴: The #energytransition fund AUM is nearing $1 trillion, and yet fossil fuel emissions have hit a new high. 𝘛𝘩𝘦 𝘥𝘪𝘴𝘤𝘰𝘯𝘯𝘦𝘤𝘵 𝘪𝘴 𝘤𝘭𝘦𝘢𝘳—𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘪𝘴 𝘧𝘭𝘰𝘸𝘪𝘯𝘨, 𝘣𝘶𝘵 𝘪𝘴 𝘪𝘵 𝘧𝘭𝘰𝘸𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘦 𝘳𝘪𝘨𝘩𝘵 𝘴𝘦𝘤𝘵𝘰𝘳𝘴 𝘢𝘯𝘥 𝘢𝘵 𝘵𝘩𝘦 𝘴𝘤𝘢𝘭𝘦 𝘳𝘦𝘲𝘶𝘪𝘳𝘦𝘥? Electrified transport and #renewableenergy dominate, but critical areas like clean shipping and #CCS (carbon capture and storage) are barely receiving funds. 2️⃣ 𝘚𝘬𝘦𝘸𝘦𝘥 𝘐𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘊𝘳𝘦𝘢𝘵𝘦 𝘝𝘶𝘭𝘯𝘦𝘳𝘢𝘣𝘪𝘭𝘪𝘵𝘪𝘦𝘴: 2024 investment heavily favored sectors like transport ($757B) and renewables ($728B), while sectors crucial to a holistic transition—like clean industry, hydrogen, and nuclear—are severely underfunded. Without a balanced portfolio of investments, we risk leaving gaps that could slow progress. 3️⃣ 𝘛𝘢𝘳𝘨𝘦𝘵 𝘚𝘦𝘵𝘵𝘪𝘯𝘨 𝘐𝘴𝘯’𝘵 𝘛𝘳𝘢𝘯𝘴𝘭𝘢𝘵𝘪𝘯𝘨 𝘪𝘯𝘵𝘰 𝘈𝘤𝘵𝘪𝘰𝘯: 89% of Fortune Global 500 companies have climate-related targets (carbon, water, #biodiversity, etc.), but targets don’t drive results on their own. The financial sector must push for more credible, enforceable benchmarks tied to tangible outcomes. 4️⃣ 𝘊𝘭𝘪𝘮𝘢𝘵𝘦 𝘓𝘦𝘢𝘥𝘴, 𝘉𝘶𝘵 𝘉𝘳𝘰𝘢𝘥𝘦𝘳 #𝘌𝘚𝘎 𝘚𝘵𝘪𝘭𝘭 𝘓𝘢𝘨𝘴: While climate dominates investment priorities, social and governance issues lag far behind. Yet, a #justtransition demands that social equity isn’t an afterthought. Are we aligning climate ambition with fairness and inclusivity across global value chains? 5️⃣ 𝘈 𝘚𝘶𝘳𝘨𝘦 𝘪𝘯 𝘗𝘰𝘭𝘪𝘤𝘪𝘦𝘴, 𝘉𝘶𝘵 𝘐𝘮𝘱𝘭𝘦𝘮𝘦𝘯𝘵𝘢𝘵𝘪𝘰𝘯 𝘎𝘢𝘱𝘴 𝘌𝘹𝘪𝘴𝘵: With over 3,500 #climateadaptation and #mitigation policies in place, we have the policy support—but how do we ensure effective implementation and global coordination? 𝗪𝗵𝗮𝘁 𝗡𝗲𝗲𝗱𝘀 𝘁𝗼 𝗖𝗵𝗮𝗻𝗴𝗲: 🌱 Shift capital from low-impact sectors and direct it toward underfunded, high-impact opportunities. 🔍 Hold companies accountable for hitting milestones tied to transition finance metrics—not just vague pledges. 🏛️ Strengthen global financial and policy frameworks to align incentives, manage risk, and drive cooperation. What do you see as the biggest obstacle to scaling transition finance effectively?

🌱 Are we walking the talk on corporate climate action? A new study by Colesanti Senni et al. (Environmental Research Communications, 2024) examines how corporations disclose their climate transition plans. Using a Large Language Model-based tool, the research assessed the disclosures of Climate Action 100+ companies—the largest global emitters. The findings reveal critical gaps and opportunities in how companies communicate their climate commitments. 📊 What the study found: ✔️ Most companies are adept at outlining ambitious targets (the “talk”), such as net-zero goals and interim milestones. However, they often fall short on the actionable steps needed to achieve them (the “walk”). ✔️ The companies that disclose more tend to show lower emissions, suggesting that transparency might signal a stronger alignment between planning and progress. ⚠️ A lack of standardization in reporting frameworks remains a major barrier. Without clear, consistent benchmarks, stakeholders are left questioning whether disclosures reflect genuine efforts or greenwashing. 🧩 My reflections: When I think about corporate climate responsibility, I see three interconnected layers: intentions, actions, and outcomes. Each is critical, but the gaps between them are where trust and progress falter. ✨ Intentions: Bold commitments are often a sign of leadership, but when they remain vague or unsupported by detail, they risk being seen as little more than a marketing exercise. 🔨 Actions: This is the most critical layer—and often the weakest link. Without concrete, measurable steps, even the best intentions lack credibility. Actions should demonstrate not just a plan but a willingness to take tough, sometimes unpopular, decisions. 📊 Outcomes: While outcomes are the ultimate goal, they’re also where the evidence lies. The study’s findings suggest that detailed disclosures might correlate with lower emissions, but is this because these companies are more transparent—or simply more prepared? This cycle of intentions, actions, and outcomes is not just a corporate issue—it’s a systemic one. How can we better connect these layers to create a climate response that is both transparent and transformative? 🌍 What are your thoughts? 💡 How can companies ensure their actions truly bridge the gap between intentions and outcomes? 💡 Are current disclosure frameworks helping stakeholders distinguish between real progress and polished promises—or are they creating more confusion? You can read the full study here: https://lnkd.in/exEDwzaK #ClimateAction #Sustainability #Greenwashing #CorporateResponsibility #NetZero