Corporate “Hotspots” Fuel Most Emissions—and the Biggest Solutions

As companies work to deliver on 2030 climate targets, key solutions from Environmental Defense Fund's (EDF) Net Zero Action Accelerator showcase implementation pathways for the biggest sources of corporate climate footprints, or "hotspots."

Over 1,000 of the world's largest companies have set net zero goals, but many struggle with implementation. Most corporate climate-warming emissions stem from a handful of sectors: agriculture, energy, transportation, industrial manufacturing, and waste management.

"EDF reviewed the science and existing technologies for high-impact, near-term approaches to help companies meet sustainability goals faster," said Ellen Shenette, Director of the Net Zero Action Accelerator (NZAA). "EDF collaborated with leading science-based organizations and pragmatic business consultancies to design Pathways, and Sub-Sector Hotspots to help companies take strategic actions that drive value, reduce risk and help meet climate goals."

New research from the Rhodium Group predicts that U.S. policy changes will slow progress on climate goals. The slowdown could increase risk for businesses, as the world's largest companies report almost $1 trillion at risk from physical climate impacts and $250 billion in potential losses from stranded assets. Despite the policy setbacks, NetZeroTracker today reported that U.S. companies with net zero targets still grew 9%, representing $12 trillion in global annual revenue.

"Climate risk is business risk-and the clock is ticking. Companies must zero in on their biggest emission hotspots across operations and supply chains to drive strategies that deliver real business and environmental impact. EDF's Net Zero Action Accelerator has outlined six high-impact actions to help companies cut through complexity and tackle their largest sources of emissions."

"Companies operating in these sectors-or relying on them in their supply chains-can make meaningful progress by taking targeted climate action. In this decisive decade for climate action, high-impact solutions matter the most. We've seen real progress when companies focus on their areas of influence, the biggest drivers of emissions, coordinating action across teams and communicating the results help companies turn ambition into action," said Shenette.

Climate Solutions on Key Corporate Emissions Hotspots:

1. Agriculture and Dairy Methane

Companies with agriculture in their supply chains have a key opportunity to advance global progress. The dairy sector holds a critical position in the fight against climate change, offering a unique opportunity to advance environmental sustainability while also driving innovation, enhancing resiliency, and supporting global food security. Bold climate action within the sector can deliver a triple win-enhancing farmer livelihoods, strengthening food systems, and significantly reducing greenhouse gas emissions. To support this transition, EDF, the convener of the Dairy Methane Action Alliance (DMAA), has introduced a four-step guidance framework designed to help companies lead on methane reduction. From measurement to meaningful stakeholder engagement, this framework equips companies to take decisive and measurable action on dairy methane emissions.

1. Circularity: Reuse, Repair and End of Life

Today's global economy consumes 100 billion tons of materials, of which only 7.2 billion tons come from secondary materials - an unsustainable, polluting model. Transitioning to a circular economy framework can help companies map, prioritize, and implement specific concepts that generate value and preserve resources. Programs that extend product life such as resale, rental and repair are gaining traction across multiple retail sectors. Companies are positioned to drive value by delivering co-benefits: brand loyalty, customer engagement and reduced materials demand.

1. Industrial Manufacturing

Industrial emissions including the production of materials such as cement, steel and the construction of buildings, have risen over 70% since 1990 and now account for roughly one-fifth of global direct emissions. Sectoral producers can address these hard-to-abate emissions with material and energy efficiency improvements, refrigerant and industrial gas management, and electrification of low- and medium-heat processes using zero-carbon power. For industrial processes that require very high temperatures or involve chemical reactions, alternative fuels-like green hydrogen -and carbon capture, utilization and storage (CCUS) will play a vital role. Companies that rely on steel and cement in their supply chains can send demand signals for low-emission solutions by setting procurement targets, engaging suppliers and joining green procurement initiatives to drive collective action and market transformation, while tools like Advanced Market Commitments (AMCs) can help scale emerging technologies and accelerate deeper emissions cuts. Engaging in industry coalitions also offers opportunities to support harmonization of emissions standards, advocate for stronger policies and stay ahead of industry trends and regulations.

1. Supplier Renewable Energy

Companies can send powerful demand signals to help decarbonize their supply chains. For example, approximately 90% of emissions for retailers come from their supply chains, posing enormous challenges and opportunities. Helping suppliers switch to renewable energy is one of the highest-leverage ways to cut supply chain emissions. Some retailers are joining buyer coalitions, embracing collective-financing models or engaging in region-specific programs to help manufacturers access clean energy options - from rooftop solar to offsite power purchase agreements. Others are providing tools and incentives for suppliers to assess and reduce their energy-related emissions. Collective action to help aggregate demand can help unlock new solutions.

1. Sustainable Packaging

Packaging decisions are deeply tied to upstream material impacts and downstream waste and disposal. Companies can directly influence packaging choices and understand the important role they play in consumer decision-making. Business efforts range from redesigning for recyclability, reusability or compostability to switching to recycled content to reducing packaging altogether. A 2023 survey of 9,000 North American, South American and European consumers found that over 80 percent will pay more for sustainable packaging. Packaging is not just a sustainability priority, but a growing compliance and cost-management concern through Extended Producer Responsibility (EPR) laws in the US and EU requiring companies to take responsibility for the full lifecycle of their packaging.

1. Transportation, Freight and Logistics

Nearly every sector, from pharmaceuticals, to retail, to technology and construction, must move their goods around the world, and many rely heavily on third-party logistics providers to move these goods by road. This makes freight a significant emissions source that, if unaddressed, is on track to become the highest-emitting sector by 2050. Fleet decarbonization is an actionable, quantifiable and reportable way to reduce emissions today - especially since most US freight routes are under 250 miles and alternative vehicles are available at a relatively low additional cost with substantial total cost of ownership savings over the asset's useful life. Companies are experimenting with ways to encourage or require lower-emission transport options - from shifting to electric or alternative fuel vehicles to rethinking routes and consolidation strategies.