Many companies already realize these benefits A number of sustainability leaders across a variety of sectors are able to find cost-efficient mitigation investments and report median benefit-to-cost ratios (BCRs) of 1x to 10x (see Figure 18). Moreover, 25% of respondents to a recent BCGxCO2 AI survey reported material decarbonization benefits.49 These include tangible improvements such as lower operating costs (cited by 44% of respondents) and increased revenues (37%), along with intangible advantages such as reputational gain (46%) and enhanced supply chain resilience (42%). Companies often focus too much on short- term risks, potentially neglecting longer-term transition challenges In fact, approximately 80% of companies reporting transition risks to CDP only disclose short-term implications. This short-term view may prevent fossil-dependent business models from fully questioning the long-term sustainability of their portfolios. By overlooking how market shifts and evolving regulations could impact future revenue streams, these companies risk underestimating the financial consequences of transition risks and missing the economic value in making bolder, forward-looking adjustments. Additionally, companies must account for the broader socio- economic costs of an imbalanced transition, which extend far beyond immediate financial losses from regulatory and technological changes.50 Years ago, we moved to seize the opportunity to work with our high carbon- emitting clients on their sustainable transition, swiftly shifting our mix of traditional fossil fuels activity towards sustainable finance-related business, especially in renewables. The transition has been profitable, and we are on track to generate $1 billion annually in income from sustainable finance. Bill Winters, Group Chief Executive, Standard Chartered Bank The Cost of Inaction: A CEO Guide to Navigating Climate Risk 31

The Cost of Inaction 2024