There have been mixed messages on the climate change agenda recently. For example, the World Bank announced in late June that it was moving away from the objective of directing 45% of its annual lending to projects with climate co-benefits while sharpening its focus on lending outcomes rather than input goals. But at individual corporate level, companies continue to derive considerable benefits from focusing on sustainability.

In 2025, Telefónica generated €743m in revenue from sustainable products and services and also achieved cost savings through energy efficiency and renewable power purchase agreements, reduced exposure to energy and climate-related risks and strengthened access to sustainable finance through instruments such as its syndicated loan linked to a Scope 1 and 2 emissions KPI, explains Global Chief Sustainability Officer, Maya Ormazabal. “The most significant climate action we have taken has been transforming our networks through the replacement of copper with fibre and the deployment of more energy efficient technologies,” she says.

In parallel, the company has sourced 100% renewable electricity across its main operations, eliminating 7.9 million tonnes of CO₂e emissions since 2015. “Reducing supply chain emissions is one of our biggest challenges, as they are the largest component of our Scope 3 footprint,” says Ormazabal. “Our target is to reduce Scope 3 emissions by 56% by 2030 compared with 2016 levels and by 2025 we had already achieved a 34% reduction, while continuing to grow our business.”

This has been achieved through collaboration with suppliers to promote circularity, renewables and decarbonisation. Key initiatives include:

• A supplier engagement programme, which assesses suppliers’ climate maturity and provides tailored improvement plans and training.

• Science-based targets requirements for key suppliers, encouraging alignment with the Paris Agreement.

• The JAC (Joint Alliance for CSR) carbon reduction programme, a telecoms industry initiative that works with suppliers to reduce product-level emissions through lifecycle assessments and reduction plans.

• Circular economy programmes, including the reuse of routers and set-top boxes.

“We also work closely with suppliers to embed environmental criteria into the design and procurement of equipment,” adds Ormazabal. “In parallel, our corporate instruction for low-carbon purchases requires procurement decisions to consider not only purchase costs but also lifetime energy use and carbon emissions.”

Business opportunities

Greg Lucas, Sustainability Manager IKEA UK and Ireland, says the company has been committed to the Paris Agreement since 2016, recognising that acting now presents substantial business opportunities. “Renewable energy, for instance, is not a cost but rather a hedge against fossil fuel volatility,” he says. “Despite rising energy prices around the world, our utility costs dropped by €25.2m from FY24 to FY25 thanks in part to energy efficiency improvements.”

Among its most significant strategic actions has been extensive investment in renewable energy and the active decarbonisation of operations.

In FY25, Ingka Group (the largest IKEA retailer) matched 94.8% of its electricity use with renewable electricity sourcing. This commitment – including over €4.3bn invested in renewable energy since 2009 and the ownership of 49 wind farms and 26 solar parks – enabled a 70.6% reduction in absolute emissions from its own operations against the FY16 baseline by FY25.

Inter IKEA Group addresses manufacturing and supply chain emissions by focusing on the areas where it can have the biggest impact. This includes increasing renewable electricity in production, improving energy efficiency, supporting suppliers in their decarbonisation journeys, increasing the use of recycled and renewable materials and reducing emissions from transport and logistics.

Ingka Group now makes more than 60% of its retail home deliveries by electric or other zero-tailpipe-emission vehicles. It has also launched a store-based buyback programme, allowing customers to sell their old IKEA furniture back to the company for resale.

At Host Hotels & Resorts, reducing environmental impact is about creating long-term shareholder value, explains Executive Vice President, Development, Design and Construction, Mike Lentz. “We view decarbonisation as an important business discipline that helps improve margins, support disciplined capital allocation, maintain financial flexibility and position our portfolio for a lower carbon economy,” he says.

Other factors include evolving building performance requirements and increasing pressure on energy infrastructure from rising demand and more frequent and severe weather events.

The company’s emissions reduction target has been validated by the Science-Based Targets initiative and it has developed a climate transition plan across its consolidated portfolio to help prioritise the investments needed over time, from energy efficiency and renewable energy to electrification and emerging lower carbon technologies.

Between 2020 and 2024, Host Hotels & Resorts completed more than 860 sustainability projects that generated approximately US$24m in expected annual savings, lowering operating costs, protecting asset value and supporting business continuity. These investments have also supported access to an aggregate total of nearly US$5bn in sustainable financing.

“One of the most important climate related actions we have undertaken is integrating climate considerations into the entire cycle of buying, owning and selling hotel properties,” says Lentz. “Climate risk, decarbonisation opportunities and resilience are built into portfolio strategy, underwriting and capital allocation, so net zero is part of how we manage assets rather than a separate initiative.”

As it does not control day-to-day hotel operations and rarely engages in new ground-up construction, supply chain emissions represent a relatively small share of the company’s total emissions footprint.

However, ESG is embedded into procurement and related topics – such as red lists for prohibited materials and preferences for locally sourced and recycled-content materials – are integrated into the supplier assessment process, while a green donations programme redirects used furniture, fixtures and equipment from hotel renovations to local nonprofit organisations.

Catalyst for innovation

Beyond operational excellence, sustainability is a powerful catalyst for innovation, suggests Sandeep Chandna, Chief Sustainability Officer at Tech Mahindra. “The single most important climate-related action we have taken is embedding climate action into our business strategy while leveraging technology as a multiplier for impact,” he says. “As a global technology company, we have the ability to help our customers accelerate their decarbonisation journeys through digital solutions that improve energy efficiency, optimise resource utilisation and enable smarter, more sustainable operations.”

Tech Mahindra’s approach to supply chain management is built around three key pillars: supplier assessments and audits, supplier engagement and capacity building, and continuous improvement through climate risk assessment.

“We work closely with our suppliers to encourage responsible environmental practices, enhance climate-related disclosures and align with our ESG expectations,” says Chandna. “We also promote supplier diversity and wherever feasible, prioritise local sourcing.”

For Musim Mas, environmental performance is a form of business resilience, explains Director of Communications and Sustainability, Olivier Tichit.

“One of our most significant climate actions has been investing in methane capture at our palm oil mills,” he says. “By capturing methane from palm oil mill effluent and using it to generate renewable energy, we significantly reduce greenhouse gas emissions while reducing our fossil fuel use. Together with other resource recovery initiatives, this supports our zero-waste milling approach and demonstrates how operational innovation can deliver measurable climate benefits.”

Across its supply chain, Musim Mas’s priority is to improve transparency and to that end it works with suppliers to reduce emissions at source. “We have achieved 98% traceability to plantation, providing greater visibility into where our raw materials originate and enabling us to identify and address climate-related risks,” says Tichit. “Maintaining a deforestation-free supply chain is one of the most significant climate actions we can take, as preventing land use change avoids substantial greenhouse gas emissions while protecting forests and biodiversity.”

Through its verified deforestation-free approach – which combines traceability with risk assessment – the company achieved a 99.47% deforestation-free supply chain as of end-2024. “We also work closely with suppliers and independent smallholders to promote good agricultural practices, improve productivity on existing land and strengthen sustainable sourcing,” adds Tichit. “At the same time, we continue to enhance emissions data across our supply chain as better information becomes available.”

He notes that while credible frameworks exist, implementation remains challenging. “We still need clearer sector-specific pathways, better emissions data, more consistent methodologies and practical guidance for engaging suppliers, particularly smallholders and smaller businesses in agribusinesses like ours.”

Ormazabal acknowledges that there is more guidance available to companies setting out on their journey to net zero than there was even a few years ago. However, she says reaching net zero remains a challenge, particularly for SME businesses with limited resources. “While frameworks and tools are essential, collaboration across value chains, industry partnerships and the sharing of best practices are equally important to help companies move from ambition to implementation,” she says. “The next challenge is to strengthen business incentives and the business case for sustainability, helping to make it a natural part of business decision-making.”

Lucas observes that the main barrier to faster deployment is often infrastructure – grid connections, permitting backlogs and the absence of long-term policy certainty that matches business ambition and available capital.

IKEA has emphasised the need for stronger collaboration between public and private sector to strengthen the business case and remove barriers and believes governments must develop clear roadmaps from ambition to implementation, accelerate the renewable energy transition and invest in grid infrastructure.