Fossil fuel dependence becomes economic threat as key industries lag in turning climate pledges into action

New analysis released today by the World Benchmarking Alliance (WBA) finds that continued dependence on fossil fuels is not only a climate risk, but a growing economic threat, with many of the world’s largest companies across vital sectors within the economy failing to put in place credible transition plans to manage the shift. Encouragingly, the findings do show signs that progress is possible, with the electric utilities sector leading the way on investment in low-carbon technology among the sectors assessed.

Published ahead of the First Conference on Transitioning Away from Fossil Fuels (TAFF), co-hosted by the Governments of Colombia and the Netherlands, the report assessed 280 companies across oil and gas, electric utilities, steel, and automotive sectors. Industries central to the global economy and energy system, collectively they employ over 15.4 million people, supply the majority of global energy and produce the key tools that form the backbone of key infrastructure.

The findings reveal a stark gap between ambition and action:

• Ambition and credibility are not levelled: While many companies have announced long-term climate targets, only a small minority have credible, investment-backed plans to deliver them. The largest gap is in the oil & gas sector, with fewer than one in ten of the 100 most influential oil and gas companies in the world having their scope 3 emissions covered by a valid target.
• Capital allocation is where the transition stalls: Capital allocation remains low, with oil and gas companies on average investing just 19% of capital expenditure into low-carbon activities, far below what is required for a 1.5°C pathway. Similar gaps persist across steel, utilities, and automotive sectors, creating a self-reinforcing cycle that locks in fossil fuel dependence across interconnected value chains.
  Progress is possible: Encouragingly, leading companies across sectors demonstrate that progress is possible. In electric utilities, some companies already allocate over 90% of capital expenditure to low-carbon investments, showing that rapid transition is both technically and commercially viable when supported by clear policy signals.
• Increasing risk: The report also highlights that dependence on fossil fuels creates systemic economic risks, including revenue volatility, stranded assets, and exposure to global energy shocks. Recent geopolitical tensions have further amplified these risks, underscoring the vulnerability of economies and businesses still reliant on fossil fuels.

The TAFF Conference in Santa Marta arrives at a decisive moment. The international community will have the opportunity to put in place the architecture to make the transition away from fossil fuels managed, equitable and credible.

To achieve this, WBA has also shared a series of recommendations ahead of the TAFF Conference on how the private sector can turn this opportunity into impact. 

This includes: 

• Mandatory greenhouse gas emissions disclosure requirements, particularly for large companies.
• Sector-specific phase-out timelines for energy-intensive sectors
• Integrating just transition frameworks into national decarbonization plans
• Strengthening clean energy targets and investment frameworks to create the conditions for scaling low-carbon capital expenditure and transforming business operations.

WBA is an official co-lead of the Private Sector Engagement Track at the TAFF Conference, which will see the organisation organise a series of high-level discussions, including stakeholder meetings and a private sector dialogue, as well as providing representation at ministerial discussions. 

Gerbrand Haverkamp, Executive Director of the World Benchmarking Alliance, said:

“Fossil fuel dependence is no longer just an environmental challenge; it is a clear and growing economic risk. Our analysis shows that while some heavy-emitting companies are beginning to adapt, most are not yet translating ambition into credible, investment-backed transition plans. Those that do are not only reducing emissions, they are strengthening their long-term resilience. Credible transition planning is one of the clearest signals of real economy progress, and it must now become the norm for business.  To help monitor business transitions, WBA is setting up the Integrated Transition Assessment, which will measure progress and provide the data and insights for what  credible, connected, and consequential corporate action looks like.”