A study by KPMG in collaboration with the International Finance Corporation (IFC) has found that half (51%) of firms in emerging markets are utilising sustainable finance.
The study analysed the sustainabilities strategies of more than 100 companies, in sectors such as energy, technology, media, transport, telecommunications, mining, and water and waste, assessing firms in terms of 51 KPIs.
Of the firms that avail of sustainable finance, green bonds (53%) are the most common instrument, the study found.
The water and waste (75%) and energy (74%) sectors are among the lead users of sustainable finance, however transport lags behind (16%).
Emissions reduction
The study also analysed emerging market company-specific targets across Scopes 1, 2, and 3, and found that around two fifths (38%) of energy firms have set emissions reduction targets, while the transport sector (42%) demonstrates the highest commitment to carbon neutral and net-zero targets.
Companies in the water and waste sector were found to lag behind here, with just 13% reporting coverage of Scope 1,2, and 3 emissions, as well as carbon neutral and net-zero targets.
While biodiversity and nature-based solutions are increasing in awareness, adoption is slow, the study found, with just 10 out of 104 companies follow the Taskforce on Nature-related Financial Disclosures (TNFD) framework.
Elsewhere, when it comes to social and community-focused sustainability, some 84% of energy and infrastructure companies report educational initiatives, with other efforts focused on humanitarian aid (48%), health (44%), and climate resilience (8%).
Decarbonisation challenges
‘The decarbonisation challenges outlined in the study echo the recent KPMG 2024 CEO Outlook report which found that for 30% of survey respondents, the greatest barrier to achieving climate ambitions is the complexity presented by decarbonisation of their supply chain,’ KPMG noted.
‘Standardising metrics and improving transparency in reporting, particularly for Scope 3 emissions, will facilitate better benchmarking and informed decision-making.’
Amidst slower economic growth over the past two years, ‘companies may require technical support to increase their biodiversity and nature-based solutions efforts which would also facilitate access to nature-driven capital sources where needed’, it added. Read more here.
