80% of companies on track to meet climate targets tie executive pay to goals
CDP Corporate Health Check, in collaboration with World Economic Forum and Oliver Wyman, brings a new annual stocktake of businesses’ climate and nature progress to Davos 2025.
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- CDP Corporate Health Check assesses companies worth 67% of global market value for their climate and nature transparency, targets, governance, strategy and progress to cut impacts
- Just 10% of companies taking tangible actions across all environmental areas covered, with just 1% reaching the highest level assessed
- Executive pay, carbon pricing, climate transition plans and supplier engagement identified as four key business levers pulled by companies using their data to make the most progress
8 in 10 companies on track to meet their climate targets now link executive pay to achieving those goals, according to the inaugural CDP Corporate Health Check, highlighting the critical role of governance and strategic action in driving environmental progress.
Set to be presented next week at the World Economic Forum’s Annual Meeting in Davos, the report assesses how the world’s largest businesses are responding to the escalating climate and nature crises. The indicators for the CDP Corporate Health Check were developed as part of the World Economic Forum’s State of Nature and Climate publication, which places the latest data on planetary health next to data on corporate action, in partnership with CDP and the Potsdam Institute of Climate Impact Research (PIK).
Analyzing 2024 corporate disclosures from CDP’s dataset covering 67% of global market capitalization, the CDP Corporate Health Check is designed to help business leaders identify priority actions to drive change and understand how their efforts compare to market peers.
It highlights the key levers being used successfully to make Earth-positive decisions, with companies on-track with their emissions targets and making progress on nature found to be significantly more likely to be using environmental data for key business decisions.
Notably, nearly two-thirds (64%) of companies on track with their emissions targets already have climate transition plans, compared to just 36% of those found to be lagging. 78% of frontrunners likewise already link executive-level pay to climate outcomes (vs. 48%); 41% price carbon internally (vs. 20%); and nearly 9 in 10 (87%) work on climate topics up and down the value chain with suppliers and customers.
The report illustrates a disconnect between businesses that meet the minimum and those that actively use their disclosure data for Earth-positive decisions in their corporate strategy. While nearly 50% of global companies assessed now disclose their core emissions data and take baseline actions like climate risk assessments, only 10% showed meaningful ambition across all key environmental areas covered; including disclosing their complete value chain emissions (Scope 1-3) and impacts on nature, having meaningful environmental targets set, setting up strong sustainability governance and strategies, and making tangible progress on environmental goals.
And just 1% of companies reached the highest level in the CDP Corporate Health Check, an indication that they are pulling all four identified levers for change simultaneously, treat climate and nature topics in tandem, and use this data for business and investment decisions.
Sherry Madera added “As the pressures on our planet intensify, the inaugural CDP Health Check delivers an unmistakable call to action – the time for decisive leadership is now. Disclosure alone cannot deliver action; integrating this disclosure data as a core dataset for key business decisions enables the levers to be pulled and the change we need to see. Companies that embed climate and nature into their strategy, governance, and financial planning are leading the way; yet the reality is that far too many businesses remain on the sidelines, and policymakers must step up to reward Earth-positive leadership and fast-track the transformation our planet urgently needs.”
James Davis, Partner, and Co-head of Climate and Sustainability, Europe at Oliver Wyman, commented: “This report highlights important progress by the corporate sector in recent years, but also the large gap in ambition and results that remains. The steep increase in disclosures, especially in the US and Asia, reflects the continued growth in focus on environmental topics by corporations across the globe, in spite of headwinds. There is evidence that this is starting to translate into results and emission reductions. However, while some organizations are making progress, many fall short, particularly in moving from disclosure to action. Our analysis shows that the most effective strategies for delivering results include putting in place transition plans, carbon pricing, value chain engagement, and linking executive pay to climate goals. It also shows that leadership in sustainability can go hand in hand with strong financial performance, provided there is a supportive economic and policy framework.”
Gim Huay Neo, Managing Director at the World Economic Forum, commented: “The analysis from the CDP Corporate Health Check underscores the reality that while there is positive business momentum, it is not commensurate with the escalating risks and consequences of the climate and nature emergency. Companies need to further leverage the power of data, technology and innovative partnerships to leapfrog from crisis to opportunity for people, planet and prosperity.”
Feike Sijbesma, Co-Chair, World Economic Forum‘s Alliance of CEO Climate Leaders, Chairman of the Supervisory Board, Royal Philips, commented “This report is an important call to action for companies to act with even more urgency, transparency and accountability addressing the impact of climate change on nature. It provides strong scientific evidence that the stability of our earth-system is at risk, impacting the lives of many, especially the most vulnerable. Now is the opportunity for all stakeholders to join forces and act boldly to accelerate the pace of nature and climate action and deliver a sustainable future for all”.<br>
For more information refer also to the full report and the reports section.