How Companies Can Work with Their Competitors To Tackle Their Climate Impact

Apple versus Microsoft, Pepsi versus Coca-Cola, Adidas versus Nike: are these rivalries slowing down substantive action on climate?

Approximately half of the world’s 2,000 largest publicly traded companies have pledged to reduce their climate footprints. These promises are important, but insufficient on their own. Despite these commitments, global greenhouse gas emissions rose by about 1.1% in 2023, reaching a record high. A small set of companies are turning their climate goals into credible transition plans and interim targets, and most importantly, into actual emission cuts. But for the rest of the pack to join the action, data collaborations between competitors will be critical—for companies, industries, and ultimately across networks of networks.

Often, a key hurdle to climate action within companies isn’t willingness. Rather, as shown in dozens of reports, and corroborated by our own experiences advising companies on managing their emissions, it’s the insufficient and disaggregated data about company products and operations, such as flights taken and materials used, that stands in the way. Most companies today are the equivalent of a teacher who doesn’t know their students’ test scores: they are in the dark about many of their operations, and as a result, about their climate impacts—along with potential cost savings, investor attractiveness, and revenue opportunities.

In 2024, only 346 companies of 21,000 around the world made the “A” list of environmental disclosure non-profit CDP’s annual rankings for thorough data quality and availability about their climate impacts. One of the most challenging areas for companies to measure is their supply chain emissions, also known as Scope 3 emissions. These represent the largest share of most organizations’ emissions, typically about 88%; the rest is made up of pollution from direct activities like fuel use, known as Scope 1, and electricity use, or Scope 2. Getting this data typically means engaging substantively with a company’s suppliers and understanding which data is worth collecting—no small feat if you work with hundreds of suppliers for everything from screws to software.

Read more: Midsized Companies Hold the Key to Scaling Up Climate Solutions

Beginning next year, however, companies will be required to report on their Scope 3 emissions in the E.U., and soon after in California and Japan. Since most companies struggle to gather their own data, many rely on industry averages or predictive models to estimate their Scope 3 emissions. Both of these methods, though, are based on poor-quality input data, making them inadequate for decision-making.

Meanwhile, other companies may have some underlying data but cherry-pick which categories to report: over half of companies listed on the London Stock Exchange that disclosed Scope 3 emissions in 2021 excluded data from the most material categories for their industries, such as the concrete used by a construction company or milk by a cheese company.

Ultimately, a lack of information means less progress on climate action. A recent study by carbon accounting firm Normative of 967 companies with net-zero commitments found that 44% of companies made no progress in reducing their Scope 3 emissions over the past two years despite their commitments, in part because they didn’t have enough, or sufficiently specific, data.

Several corporations with large supply chains and significant Scope 3 emissions, including Walmart, Schneider Electric, and Apple, have begun to obtain more reliable data by requesting that suppliers provide information on their own emissions—which is then helpful for incentivizing reductions. For example, Apple’s Supplier Clean Energy Program has asked over 250 suppliers to use 100% renewable energy for their operations by 2030. This reduces the suppliers’ Scope 2 emissions, while helping Apple lower its Scope 3 emissions.

Yet even as companies gather better-quality data from their own operations and supply chains, they may need to work with competitors to make more substantial progress.

Encouragingly, we are starting to see industry collaborations emerging, with a focus on sharing emissions data in particular. Catena-X, first born as the “Automotive Alliance,” is an open data platform that facilitates secure, transparent data exchange between 170 car manufacturers and IT companies like Volvo Group, Volkswagen Group, and SAP about each member’s supply chain, including their carbon emissions. The project has received widespread support from major players in the industry, who are otherwise fiercely competitive with each other. It better addresses shared challenges and allows competitors to learn from each other, co-invest in necessary technology and infrastructure, and collectively reduce emissions over time—such as through building more resilient supply chains for semiconductors or reducing waste in battery manufacturing.

Read more: The Power of Data to Fight Climate Destruction

While sustainability-focused industry groups have existed for decades, Catena-X moves further in collecting and standardizing supply chain emissions data. This is especially important for investors: deciding on a comprehensive approach for reporting Scope 3 emissions across a whole industry can then help investors compare apples to apples. These collaborations may also be critical for countering claims of “greenwashing” by more transparently demonstrating emissions data and reductions in comparison to peers.

Nonetheless, starting a new initiative is not always necessary. Established industry groups like the Forest Stewardship Council, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, and the Sustainable Apparel Coalition can be a natural place to collect this data—so long as the group is influential in its industry, and has the required expertise to ensure the data collected is standardized, focuses on material sources of emissions, and is fit for purpose.

Finally, once climate data collaborations between industry competitors exist, you need connective tissue between different industries: a network of networks to ensure that this data doesn’t stay siloed. For example, Normative’s Carbon Network helps companies gather and share climate data across their value chain, and collaborate on reduction efforts across industries by connecting to other emissions data networks like the CDP and Project Perseus, which aims to automate emissions reporting for 5.5 million U.K. small and medium-sized businesses. Until a web of networks becomes common for carbon emissions data, organizations of all sizes should put aside their competitive shields and begin collecting and sharing climate data and learnings. The earth depends on it.

Isabella Akker is a climate strategy advisor and was most recently portfolio manager at TIME CO2, TIME’s climate action arm. Alexander Schmidt is head of science, sustainability, and climate research at Normative, a global carbon accounting firm headquartered in Sweden. Normative is a knowledge partner of TIME CO2. Schmidt is also an economics lecturer at Zeppelin University in Germany.