New research has found that just one in three businesses are on track to achieve their emissions reduction targets, while those making the most progress are companies which most effectively pull key governance and strategy levers, linking executive pay to climate goals.
In the first edition of its Corporate Health Check report, the CDP has assessed how effective large corporations are in integrating Earth-positive decisions into their business models. The study used indicators which have been developed as part of the World Economic Forum’s ‘State of Nature and Climate’, which places the latest data on planetary health next to data on corporate action[i].
The study utilises CDP’s data on corporate disclosures which covers 67% of global market capitalisation, allowing for an in-depth study as to how companies approach ESG targets. Companies disclosing through CDP have reduced emissions by 2% annually, even as global emissions rose by 1% each year. However, only one-third of businesses are on track to meet their own climate targets, with European firms leading progress over other regions.
The report highlights what they describe as a lack of ambition, where just 1 in 10 companies are embedding Earth-positive decision making across their business. The greatest progress is seen in the disclosure of emissions, whereby 79% of CDP disclosures include at least some Scope 3 emissions reporting, in addition to Scopes 1 and 2. The research found that 64% of companies that are on track to deliver their emissions goals have climate transition plans set up.
Source: CDP[ii]
CDP’s chief executive Sherry Madera said in a press release:
“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.”[iii]
The report found that of those companies deemed ‘frontrunners’ in achieving their emissions targets, the overwhelming majority (78%) said that they tie executive pay to their ESG goals.
This follows previous research from PwC and the London Business School (LBS) in 2023 which explored the relationship between ESG measures and executive remuneration, finding that 78% of businesses have some form of carbon target linked to pay. The research analysed the 50 top European blue-chip companies- those in the STOXX Europe 50. These businesses were then split into two sub-categories, the ‘Climate Action 100+’ (CA100+), which accounts for 14 of the 50 companies and the ‘non-Climate Action 100+’ (non-CA100+) which covers the remaining 36[iv].
Overall, the research found that almost all companies at least reference that carbon is considered in executive pay; however, there is variation in how this is applied. PwC found that 71% of CA100+ companies are taking what the researchers’ class as a ‘basic’ approach- translating carbon strategy into an explicit carbon measure in executive pay with a separate weighting. This is significantly higher than amongst non-CA100+ companies, where half (50%) use the measure. Moreover, 64% of CA100+ companies go beyond this and have an explicit carbon measure worth 10% or more of the incentive (compared to 25% of non-CA100+ companies) - They classify this higher weighting as ‘Better’[v].
References
[i] Corporate Health Check 2025 - CDP
[ii] Corporate Health Check 2025 - CDP
[iii] 80% of companies on track to meet climate targets tie executive pay to goals - CDP
[v] Ibid
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
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