Climate change and decarbonization

The climate agenda has shifted. What was once a voluntary sustainability effort is now a regulated, investor-driven, and reputational imperative. With the EU’s proposed 2040 climate target of 90% net GHG reduction and the full implementation of Fit for 55, CBAM, and CSRD, organizations must move beyond ambition and into execution.

Fit for 55 is no longer a proposal, it’s law. Emissions pricing, energy efficiency mandates, and renewable targets are binding across sectors. The EU Emissions Trading System (ETS) now includes maritime transport and ETS2 will cover buildings, road transport, and small industry starting in 2027. The Carbon Border Adjustments Mechanism (CBAM) enters its financial phase in 2026, requiring importers to purchase certificates for embedded emissions. Under CSRD, large companies have been required to disclose detailed climate risks, energy use, and transition plans since FY2024.

These frameworks are not just compliance checkboxes, they’re strategic levers.

Climate strategy is now powered by AI-driven scenario modeling, digital MRV systems, and real-time emissions tracking. Organizations are investing in:

• Climate risk analytics to inform capital allocation
• Digital twin models for decarbonization pathways
• Automated reporting tools aligned with CSRD and EU Taxonomy

The winners will be those who can turn data into decisions fast.

The EU’s Strategic Technologies for Europe Platform (STEP) and updated Green Deal Investment Plan aim to mobilize EUR 1.5 trillion by 2030. Companies are accessing:

• Transition finance for hard-to-abate sectors
• Green bonds and sustainability-linked loans
• Climate-aligned M&A to accelerate capability building

Financial institutions are embedding climate risk into credit models, making decarbonization both a moral imperative and a financial one.

Climate litigation is increasing. NGOs, investors, and regulators are scrutinizing green claims, transition plans, and board accountability. Businesses must:

• Develop credible, science-based transition plans
• Align with TCFD, ISSB, and EU Taxonomy
• Prepare for reputational risk linked to climate inaction

Resilience is no longer about surviving disruption, it’s about leading transformation.

KPMG provides support in areas such as:

• Regulatory readiness: CSRD, CBAM, ETS2
• Transition planning: Sector-specific decarbonization pathways
• Climate risk modeling: AI-powered analytics and scenario testing
• Sustainable finance: Strategy, structuring, and reporting
• Governance and assurance: Climate controls, audit, and litigation defense

Now is the time to act with clarity, credibility, and a competitive edge. Please reach out to us to learn more about how we can help you on your climate journey.