Strengthening resilience and driving competitiveness through climate action

3. Decarbonise where it reduces operational exposure

For much of the past decade, decarbonisation efforts have often been driven by targets and reporting requirements rather than operational realities. In 2026, this approach is increasingly untenable. Leadership teams are under pressure to demonstrate that climate action delivers tangible benefits in terms of cost control, reliability, and risk reduction, and not just progress against distant milestones.

The most effective decarbonisation strategies now start by identifying where emissions are most closely linked to operational exposure. This typically includes energy-intensive assets, fuel-dependent processes, and systems that are sensitive to price volatility or supply disruption. For utilities, this may mean prioritising the decarbonisation of heat generation, grid losses or peaking capacity where fuel costs and availability pose material risks. For manufacturers, it often involves electrification of processes, optimisation of heat systems or reducing reliance on volatile fossil inputs.

As electricity grids decarbonise and transport electrifies, however, the balance of climate exposure is shifting. Operational emissions become less dominant, while the carbon embedded in capital investments, materials, and construction becomes increasingly material. For asset-heavy sectors, this is not only an emissions challenge but a strategic one. Embodied carbon is locked in for decades, difficult to reverse and tightly coupled to long-term asset performance, regulatory exposure, and reputational risk. Decisions about design, materials and construction methods therefore become some of the most consequential climate choices an organisation makes.

When decarbonisation is targeted in this way, the benefits extend beyond emissions reduction. Lower dependence on fossil fuels reduces exposure to geopolitical shocks and energy market volatility. Electrification and efficiency improvements often improve process control and predictability. At the same time, reducing embodied carbon in new assets can lower future compliance risk, protect asset value and avoid costly retrofits as standards tighten.

Crucially, this approach requires organisations to move away from treating decarbonisation as a uniform exercise across the footprint. Not all emissions reductions are equally valuable from a business perspective. In 2026, leadership teams are increasingly differentiating between measures that deliver resilience and those that are largely symbolic. This does not mean abandoning ambition, but sequencing action so that early investments strengthen the organisation's ability to operate under stress, rather than locking in new forms of long-term exposure

4. Secure and decarbonise the value chain

For many organisations, the majority of climate exposure lies outside direct operations. Supply chains are increasingly affected by climate impacts, geopolitical tensions, and regulatory changes. At the same time, expectations around value-chain decarbonisation continue to grow, particularly for emissions-intensive materials and components.

In 2026, the challenge is to move beyond treating the value chain primarily as a reporting boundary. While Scope 3 accounting remains important, leadership teams are recognising that data collection alone does little to address underlying risk. The priority is to identify where emissions intensity, climate exposure, and business criticality intersect within the value chain.

This typically involves focusing on a relatively small number of suppliers, materials or logistics routes that are both emissions-intensive and operationally critical. For construction companies, this often includes cement, steel and key prefabricated components. For manufacturers, it may involve specialised inputs, chemicals or electronic components with limited substitution options.

Engagement with these suppliers needs to shift from compliance-driven questionnaires towards practical discussions about continuity, substitution, and transition pathways. In some cases, this may involve supporting suppliers in their own decarbonisation efforts. In others, it may require diversifying sources, redesigning products, or rethinking specifications to reduce dependency.

From a resilience perspective, securing the value chain is as much about flexibility as it is about emissions reduction. Organisations that understand where they can substitute materials, regionalise supply or adjust designs are better positioned to respond to disruption. In 2026, value-chain decarbonisation that strengthens supply security is increasingly seen as a competitive advantage rather than a cost burden.

5. Embed climate into capital allocation

Capital allocation is where climate strategy becomes real. In asset-intensive sectors, investment decisions made today will shape performance and risk exposure for decades. In 2026, investors, regulators, and boards are paying closer attention to whether capital is being allocated in a way that accounts for climate risk and transition dynamics.

Embedding climate considerations into capital allocation goes beyond adding a risk note to investment proposals. It requires integrating climate risk, transition readiness and resilience performance into how projects are prioritised, approved and sequenced. This includes assessing how assets will perform under different climate scenarios, how exposed they are to regulatory change and how flexible they are in the face of uncertainty.

For utilities, this may involve reassessing long-lived generation or network investments in light of changing demand patterns, climate impacts, and policy trajectories. For construction and manufacturing, it often means evaluating whether new facilities, equipment or technologies remain viable under more stringent emissions constraints and physical climate risks.

In practice, this requires new decision-support tools and metrics that translate climate considerations into financial and operational terms. Leadership teams need to understand not only the emissions profile of investments, but also their exposure to future costs, disruption and obsolescence. In 2026, organisations that can demonstrate disciplined, climate-informed capital allocation are better positioned to secure financing, manage insurance costs and maintain investor confidence.

Moving forward – climate action as a test of organisational resilience

When considered together, these five priorities reflect a broader shift in how climate action is understood. In 2026, climate strategy is increasingly judged by its ability to strengthen organisational resilience and competitiveness rather than by the elegance of its targets or narratives.

This does not diminish the importance of long-term ambition. On the contrary, it grounds ambition in operational reality. Organisations that focus climate action where it reduces exposure, protects critical assets, secures value chains, guides capital allocation, and strengthens governance are better equipped to navigate sustained disruption.

For leadership teams, climate action can no longer be treated as a parallel sustainability agenda. It is a test of whether the organisation can continue to operate, invest, and compete as volatility becomes a defining feature of the business environment. Those that integrate climate considerations into core decision-making will reduce risk while positioning themselves to capture advantage in a changing world.

In this sense, climate action in 2026 is less about compliance or signalling and more about competence. The organisations that recognise this shift are likely to emerge more resilient and more competitive as the decade unfolds.