The Cost of Inaction 2024

Using customer outcomes to define success, a major utility created an adaptation and resilience strategy to strengthen its electrical grid against expected increases in damaging storms. Key performance indicators require the company to minimize interrupted customer minutes, post-event recovery costs and the number of critical customers without power during a major weather event.The plan developed by the company focused on three areas: strengthening the grid to withstand severe weather events, modernizing it to minimize the impact of disruptions, and ensuring swift power maintenance during and after major events. For every $1 invested in the plan, the company was able to save $2 to $3 in net utility, customer and community benefits over the life of the investment. Source: BCG.CASE STUDY 4 Utility leveraging resilience to better serve customers A biopharma company assessed the risk associated with a pass-through of a carbon tax across its upstream value chain. It estimated that the cost of not decarbonizing the supply chain was ~2-3x the cost of supporting supplier decarbonization under likely climate scenarios. Source: BCG.CASE STUDY 5 A biopharma company’s case for decarbonizing the supply chainDecarbonize assets and operations Reducing carbon emissions is now critical for businesses not just to meet climate goals but also to ensure long-term resilience. Some early levers that industries can pull include improving energy efficiency, integrating renewable energy sources and transitioning to low-carbon technologies and fuels. While companies are reducing scopes 1 and 2 emissions, tackling scope 3 emissions – which are often more than 10 times greater than scopes 1 and 2 combined – remains a significant challenge. Companies have limited control over suppliers and customers, while small and medium businesses in their value chains may lack the ability to decarbonize. Addressing scope 3 requires deep collaboration with suppliers and customers across the value chain.62 To achieve our net-zero target by 2040, it is essential to reduce suppliers’ emissions. We are starting to ask major suppliers to aim for net-zero scope 2 emissions by 2030 and plan to support their capacity building. Shiro Kambe, Senior Executive Vice President, Corporate Executive Officer, Sony Group CorporationWe go beyond tender requirements by using the Open-es platform to help SME suppliers enhance their own sustainability through ESG tools, training and certifications, allowing them to rank higher in our tenders and building climate resilience across our supply chain. Concetta Testa, Head of Sustainability, Autostrade per l’Italia (ASPI) Climate leaders are making headway on their scope 3 upstream emissions by cascading ambition and support to suppliers. Procurement teams are spearheading these efforts, integrating climate goals into purchasing decisions and using their influence to push for cleaner technologies and sustainable practices across supply chains. To support such ambitions, the World Economic Forum’s Net-Zero Value Chain Support Hub,63 developed by the Alliance of CEO Climate Leaders in partnership with BCG, offers a practical starting point with resources and tools to help procurement and sustainability professionals measure, reduce and set targets for upstream emissions. In certain transition scenarios, financial support for decarbonizing suppliers can be a cost- efficient move. The Cost of Inaction: A CEO Guide to Navigating Climate Risk 42