Climate Goals and Tariffs: Can Companies Stay on Track?
Economic pressures — including elevated interest rates, persistent inflation and rising trade barriers — combined with heightened regulatory uncertainty, are creating temporary headwinds for corporate decarbonization plans.
In this challenging environment, companies with higher leverage and more aggressive carbon reduction targets may find it increasingly difficult to stick to their near-term transition goals. This contrasts with firms that have less ambitious climate goals and stronger balance sheets, which may have an easier time in the short term.
Investors may consider prioritizing companies that demonstrate resilience by balancing achievable climate commitments with prudent financial management. Firms that strategically align their decarbonization ambitions with their financial capacity may offer a more reliable pathway to sustainable returns amid economic volatility.
Interacting and interpreting the charts: Use the dropdown menu to filter by sector peer groups. Sector definitions are based on the Global Industry Classification Standard (GICS®) for MSCI ACWI Index constituents. GICS is the industry-classification standard jointly developed by MSCI and S&P Dow Jones Indices. Click on any point in the scatter plot to view detailed information about a specific company or sector.
An upward slope in the trendline indicates that within a selected peer set, companies with higher leverage (i.e. higher debt-to-equity ratios) tend to have less ambitious emission-reduction targets, and vice versa. Companies plotted below the trendline have relatively more ambitious decarbonization targets given their leverage compared to the companies above the trendline.
Data as of April 17, 2025. Projected remaining annual emissions reduction percentage indicates the remaining greenhouse gas emissions reduction (expressed as the average percentage change per year) required for the company to achieve its target(s), based on its latest available total emissions (Scopes 1, 2 and estimated Scope 3) and assuming a linear pathway toward achieving its target(s). We use estimated Scope 3 emissions to calculate total emissions due to reporting inconsistencies between companies. The trendline is based on linear regression. Sector-level figures represent median values of companies within that sector and are not adjusted for industry, regional or company size differences. Source: MSCI ESG Research and FactSet
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