High-emitting sectors should be regarded as the vehicles for decarbonisation, not its antithesis. However, scaling these sectors in order to facilitate the push toward net-zero sparks questions of who is really being left behind by the transition to renewables, and how both public and investor trust might shape the justness of the transition itself.
There has arguably never been more emphasis placed on the importance of the transition to renewables. As physical climate risks become ever more acute, and the impact of climate change on day-to-day life across the world becomes impossible to ignore, the need to decarbonise is insurmountable.
However, as decarbonisation accelerates, public resistance grows too, often driven not by opposition to climate action itself, but by concerns over whether the transition is just.
As affordability concerns and disruptions to daily life grow, high-emitting industries seem, from the sidelines, to have continued their operations without significant change to their products and operations. This raises the question of who is being left worse off by the transition and why we should trust the high-emitting sectors to act as the transitionary force toward the green transition.
This creates a fundamental tension. How do we reconcile the essential role these high-emitting sectors play in enabling a low-carbon future with their long-standing reputation for fossil fuel usage, production and environmental harm? In other words, how do we balance the “green” demand with so-called “unclean” supply?
Before addressing this challenge, it’s worth unpacking a few assumptions embedded within it.
First, which sectors are we referring to; what are the facts and what are the drivers behind them?
The “high-emitting” bracket typically encompasses industries whose operations involve the heavy consumption of fossil fuels, such as shipping, cement, chemical production, steel, and aviation. There are also the industries involved in the extraction of the fossil fuels themselves, namely coal, oil, gas and mining, though this list is far from exhaustive.
These industries are all (traditionally at least) extremely dependent on fossil fuels, either from a commercial or operational perspective. Outside of extraction-focused enterprises where oil, gas and other products obviously remain central to core business purposes, industries such as construction or aviation struggle to move away from the high-emitting bracket due to the integral nature of fossil fuels within their value chain.
For instance, Sustainable Aviation Fuel (SAF) is an extremely effective way to reduce emissions within the industry, with the potential to contribute up to 65% of the reductions in emissions needed by aviation to reach net-zero emissions by 20501. Though extremely promising, it remains too expensive for many providers and for those who could in theory afford to implement it into their fleet, it is not available in large enough quantities. Therefore, for now, traditional fossil fuel-derived fuels continue to remain integral.
This disparity between progress against decarbonisation and operational pragmatism is most clearly seen in developing and emerging nations. Countries such as Guyana, which are fast-developing, must invest heavily in infrastructure and therefore construction. This, however, often comes at the cost of high emissions.
For example, producing steel at scale without a carbon-based fuel source, though possible, remains too logistically and economically challenging to implement within these emerging countries. By contrast, conventional fuel sources remain more accessible and far more financially feasible within many markets, especially within developing countries.
This is not to say progress isn’t being made. Cement, for instance, is one of the most frequently used resources. Due to manufacturers having to burn virgin limestone in kilns at high temperatures using fossil fuels, the cement industry contributes roughly 8% to global GHG emissions. However, recent innovations have made the use of waste products from various industries, fired at much lower temperatures in kilns powered by renewables, possible. These advancements have the potential to reduce the carbon footprint of cement by 95% and, most importantly, are a feasible alternative to traditional methods across the world, allowing the solution to move beyond theory and into practice.
However, the reality continues to be that high-emitting sectors, as well as the fossil fuels that power them are still deeply needed and will be for some time, with renewables and cleaner alternatives needing to cross the accessibility and cost barrier before they become a workable solution for all.
Investments and divestments – loophole or tool?
Despite this, investors and wider stakeholders are now beginning to expect visible, short-term progress against decarbonisation goals. As examined above, the structural constraints facing these sectors mean that change is often slow or lacks significant impact. In order to deliver against these demands, companies often look for short-term actions that drive revenue, but often fail to address the root cause of the emissions.
For example, some high-emitting companies are choosing to report the divestment of various arms of the business as a reduction in direct emissions. However, the emissions from the divested businesses have not been removed or addressed in the slightest, undermining the entire notion of decarbonisation.
Moreover, as companies grow and expand their operations through M&A growth for example, emissions baselines and targets have to be reset to accommodate the added emissions. This can be easily perceived as a license for companies to increase their GHG emissions without issue.
This is not to say that M&A is always used as a loophole for companies to skirt their climate responsibilities and feign progress. By contrast, M&A is an exceptionally powerful tool for corporate entities to finance, build and operate low-emission or renewable solutions that benefit both the wider population but also leverage growth in high-demand markets, positioning the company for long-term resilience. For example, take the recent Enel/Qatar Investment Authority (QIA) M&A announcement. The QIA acquisition of 50% of renewable energy projects in sub-Saharan Africa perfectly exemplifies how large-scale investment combined with new low-carbon opportunities in developing markets can lead to substantial return on capital whilst also meaningfully advancing the green transition.
Therefore, though M&A will be essential in reallocating capital to finance the green transition, it can also be used to perpetuate a disconnect between economic growth and emissions reduction. This divide has the potential to fuel scepticism, with companies risking appearing as unwilling rather than unable to transition.
Are high emissions the only reason as to why these industries struggle to cultivate a positive perception as key drivers of the green transition?
In short, no, there are a fair few reasons as to why these sectors as a whole struggle to cultivate a positive image.
Effects on local communities, safety incidents, and many more topics are examples of causes of public/investor wariness, often bringing significant damage to the brand as well as impacting the sector as a whole. This is further exacerbated by sectors like mining being mandated to report incidents within their operations directly, prompting public opposition to the brand/industry. By contrast, for companies further away from the sectors outlined above, reporting on supply chain incidents can be embedded within broader supply chain due diligence or ESG disclosures, allowing them to distance themselves more effectively.
In sum, there are many potential reasons behind the typically negative perceptions of these industries, but discussing these reasons in full lies beyond the scope of this article.
However, one key element to consider when assessing the reputations of these industries is the magnitude of their operations. In other words, the impact of these industries, both positive and negative, is far more visible compared to other sectors and, as such, draws a large amount of scrutiny.
Steel, cement, aviation, and mining by their very nature, conduct their operations on a massive and highly visible scale, making their impact almost impossible to miss. Enormous cargo ships laden with goods, towering cement kilns, staggeringly large open-pit mines, and the continuous sound of planes overhead are all examples of just how visual the scale of these operations are, and are as such more likely to attract attention from regulators, investors, and the public alike. This often results in the etching of negative associations into collective memories in a far more enduring way than any incremental sustainability wins like efficiency upgrades or green project launches. While breakthroughs like low-carbon steel or biofuel-powered flights can spark public intrigue, the sheer scale and inescapability of their environmental footprint often overshadow tangible progress.
For example, earlier this year BHP scaled back the proposed roll-out of their decarbonisation initiatives, including the electrification of their large haulage trucks and other investments towards meeting their net zero targets. This resulted in widespread criticism across many stakeholder groups. Compare this to the attention (or lack thereof) given to financed emissions; namely, downstream emissions generated indirectly from investments made by financial institutions. Indeed, the WEF states that for some financial institutions, financed emissions are roughly 700 times larger than the direct emissions of these companies; something that should arguably be far more of a focus point for scrutiny.
Though as stated above, capital allocation decisions will be key in propelling the green transition, my point is that less visible companies shouldn’t be subject to less criticism simply because they are less visible and have made steady reductions against emissions year-on-year, and that the rolling back of green initiatives shouldn’t always be regarded as disregard for the transition. Indeed, for many companies like BHP, delaying fleet electrification and other decarbonisation pushes will likely have been done extremely reluctantly as delays can mean foregoing potential long-term shareholder value and early-mover competitive advantages.
Therefore, the visibility of high-emitting sectors places them at a distinct disadvantage in cultivating a positive reputation compared to less visible industries, an often-unfair barrier to fostering public trust with potentially severe consequences for the success of the green transition.
So, returning to the question, how do we balance the reputation of these industries against the integral role they play in the green transition?
In short, transparent, honest reporting of both the positive and negative - the progress made displayed next to the challenges encountered. These sectors will massively struggle to inspire public trust and successfully position themselves as enablers of the green transition without transparency and therefore credibility in their reporting.
This sentiment has been reflected over the past year as a notable shift in narrative from overarching ambitions to the realities of delivering tangible progress. Investors and the public alike are increasingly looking beyond net-zero pledges or emission reduction targets and instead focusing on how these targets are actually being delivered.
This includes how companies are reporting on falling short of their goals. Acknowledging and owning delays, challenges, and trade-offs should no longer be seen purely as a reputation risk but a marker of accountability and honesty. In sectors like the ones examined here, where decarbonisation is an extremely complicated task, credible climate narratives must be grounded in operational realities and granular-level detail, not just aspirations and potentially outdated frameworks.
A good example of this comes from Anglo American. As a leading mining company, Anglo American has taken decisive action within their own operations and within the value chain to decrease emissions and environmental impact, both as an operational and community-focused priority.
In the Climate Transition Plan 2026-2028, Anglo American sets out its pathway to decarbonisation. The plan includes specific site-level initiatives, targets as well as the steps between them. Moreover, the plan is honest about Anglo American’s performance against their climate objectives, balancing the progress made with the acknowledgement of the difficulties faced on the way.
“We have plotted our projected emissions pathway trajectory against (1) the Science Based Targets initiative (SBTi) 1.5°C pathway using the absolute contraction method for a 2020 baseline and 2040 long-term target and (2) the IEA 2050 Net Zero Roadmap trajectory. Our 2030 target of a 30% reduction is not aligned with these trajectories. Recognising this and the scientific imperative of action, we will pursue efforts to go further. Where we can, we will strive to achieve a 35% reduction – which our analysis suggests would be broadly Paris-aligned.”
To sum up, these industries have to invest in transparent storytelling: how they have actively engaged stakeholders, how they have made decisions, and crucially, how they have performed against these decisions, positive and negative outcomes alike.
I should say that though transparent reporting is an integral step toward changing the perception of high-emitting sectors and sparking acknowledgement of the vital role they play within the green transition,
it cannot be looked at in isolation.
In truth, the reputation around these industries may always be hampered by longstanding opinions and preconceptions. However, this is the crux of the article – credibility and therefore the building blocks of reputational change are not about perfection, but honesty and genuine intention. In short, companies, high-emitting companies in particular, must show that sustainability is built into the fundamentals of their operations rather than built on. This is what will help drive the change in the narrative of high-emitting, hard-to-abate sectors from polluters to green transition enablers.
1 International Air Transport Association