Climate Change and Business: Why Measuring Matters
Key Takeaways
- Global temperatures from the past three years (2023–2025) averaged more than 1.5°C above the pre-industrial level, the first time a three-year period has exceeded the 1.5°C Paris Agreement limit.
- Based on the current rate of warming, the 1.5°C long-term threshold could be reached by the end of this decade, over a decade earlier than predicted when the Paris Agreement was signed.
- The CSRD now applies to larger companies with 1,000+ employees and €450M+ turnover, requiring them to consider double materiality, how a company both impacts and is impacted by climate change, and to report scope 3 emissions.
- The Empowering Consumers for the Green Transition Directive (ECGT) is already law, banning generic environmental claims and offset-based “climate neutral” product labels from September 2026.
- Product-level carbon measurement using Life Cycle Assessment (LCA) following ISO 14040/44 is no longer just a best practice, it is the foundation of defensible sustainability communication.
The State of Climate Change in 2026: What the Data Says
Climate change has moved well beyond a future scenario. The scientific evidence published in early 2026 is unambiguous: we are living through the hottest period in recorded history, and the pace of change is accelerating.
The WMO’s State of the Global Climate report confirms that 2015–2025 are the hottest 11 years on record, with 2025 ranking as the second or third hottest year on record at approximately 1.43°C above the 1850–1900 average. Atmospheric data from 2025 paints a clear picture: human activity remains the dominant driver of the exceptional temperatures being observed.
The consequences are physical and economic. Climate extremes are directly linked to rising food prices, health risks, power outages, and displacement. The 2025 WMO report also links climate to growing health challenges, with 1.2 billion workers exposed to heat stress annually and about half the world’s population at risk of dengue fever.
For businesses, the data is a call to action, not only on moral grounds, but because the regulatory and market environment has fundamentally changed.
The Regulatory Landscape: What Companies Must Now Disclose
CSRD and the Era of Mandatory Climate Reporting
The most consequential piece of climate-related business legislation in Europe remains the Corporate Sustainability Reporting Directive (CSRD). The first companies subject to the CSRD had to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.
The directive has since been updated. In December 2025, the EU agreed to an Omnibus package amending its sustainability laws, including the CSRD. The agreement changes the timing, scope, and requirements, stopping the clock for companies that have not yet filed disclosures and postponing CSRD deadlines for those due to report in 2026 to 2028.
Despite the scope narrowing, the core climate obligations remain firm. Under the compromise, the CSRD would still require mandatory disclosure of greenhouse gas emissions, including scope 3 emissions. A full corporate carbon footprint will be required by the ESRS, including difficult-to-measure Scope 3 emissions, and companies must also outline the risks climate change poses to their business model. The E1 climate standard will be deemed material for most companies, especially those in carbon-intensive sectors.
The Greenwashing Crackdown: ECGT Takes Effect in September 2026
While the EU Green Claims Directive proposal was paused in 2025, the regulatory floor has not dropped. The Green Transition Directive was adopted by the EU in February 2024 and will begin to apply from 27 September 2026. It will introduce specific prohibitions regarding environmental claims, including “climate neutrality,” “net zero,” or “eco-friendly” statements, unless substantiated with evidence.
ECGT will prohibit generic environmental claims such as “climate-friendly,” “CO2-neutral,” “energy-efficient,” “green,” “biodegradable,” “eco,” or “environmentally friendly” without providing a clear and prominent specification of the claim on the same medium.
This means that companies relying on vague sustainability language, without quantified, lifecycle-based evidence, face significant legal and reputational exposure from September 2026 onwards. For a deeper dive on what this means in practice, see our guide on the EU Green Claims Directive Explained.
Regulatory Timeline at a Glance
| Regulation | Key Requirement | Applies From |
|---|---|---|
| CSRD (Wave 1) | GHG disclosure incl. Scope 3, double materiality | FY 2024 (reports in 2025) |
| CSRD (Omnibus revised scope) | 1,000+ employees, €450M+ turnover | FY 2027 (in-scope EU companies) |
| ECGT (EU Greenwashing Directive) | No generic green claims; “carbon neutral” bans | September 2026 |
| ISO 14040/44 | Methodological standard for LCA | Ongoing best practice |
| ISO 14067 | Product carbon footprint calculation standard | Ongoing best practice |
Why Product-Level Carbon Measurement Is the Right Response
From Corporate to Product Footprints
Corporate-level emissions reporting gives regulators and investors a high-altitude view. But climate change is fought at the product level, in the ingredients sourced, the packaging chosen, the energy used on the production line, and the logistics routes taken.
A total product carbon footprint is a measure of the direct and indirect greenhouse gas (GHG) emissions associated with all activities in a product’s life cycle, calculated by performing a Life Cycle Assessment (LCA) according to international standards that concentrates on GHG emissions with an effect on climate change.
Developing a data-driven decarbonisation strategy requires accurate modelling of Scope 3, which for many companies entails developing product carbon footprint (PCF) results for all of their products. Aligning carbon footprints for individual products with corporate reporting allows companies to show how changes at the product level drive corporate mitigation progress, and enables them to identify emission hotspots down to specific products, purchases, and suppliers.
This alignment between product data and corporate reporting is precisely what ISO 14040/44 and ISO 14067 are designed to enable. To understand the technical difference between these two standards and their strategic implications, explore our article on Product Carbon Footprint vs Life Cycle Assessment: What’s the Real Difference?
The Scope 3 Problem, and the Data-Driven Solution
One of the most persistent challenges in corporate climate action is Scope 3 accuracy. According to Ivalua data, 60% of organisations characterise their Scope 3 reporting as a “best guess.” Companies must engage with their value chain to collect supplier- and product-specific data rather than rely on general industry averages.
With 35% of businesses behind on their Scope 3 decarbonisation targets and 60% of companies lacking a dedicated strategy to reduce Scope 3 emissions, the gap between ambition and measurement is clear.
The solution is not more spreadsheets, it is systematic, automated product carbon footprinting. When a company can generate credible, ISO-compliant carbon data at the product level, it becomes possible to make real decisions: which supplier to switch, which material to reformulate, which packaging to redesign.
Consumer and Market Pressure Reinforces the Case
About 85% of consumers say climate change is disrupting their lives. As a result, investors, consumers, regulators, and markets are paying closer attention to companies’ climate initiatives than ever before.
What hasn’t slowed down is the demand for credible environmental claims. Consumers continue to expect transparency, and many are willing to pay for it, with 67% of shoppers saying they prefer environmentally friendly products, even if they cost more.
This commercial reality underpins why measurement is not just a compliance exercise. Companies that can demonstrate their climate impact with product-level data are better positioned to win customers, retain investors, and navigate regulatory scrutiny. For a broader view on this shift, see The Future of Sustainable Production.
LCA as the Scientific Bridge Between Data and Climate Action
Life Cycle Assessment is the methodological backbone of credible climate action at the product level. Conducted according to ISO 14040 and ISO 14044, an LCA systematically maps every environmental input and output across a product’s life, from raw material extraction to end of life.
Companies utilise LCA to identify environmental hotspots, optimise product designs, and comply with regulatory frameworks like ISO 14040 and 14044. Carbon footprint measurement specifically quantifies the total GHG emissions associated with a product, expressed in carbon dioxide equivalents (CO₂e), helping businesses focus specifically on climate change impacts.
When LCA is automated and integrated into product development workflows, it transforms sustainability from a reporting obligation into a design tool. Engineers can compare formulations, sourcing decisions, and packaging options, all in terms of their carbon impact, before a product ever reaches market.
This is what makes AI-powered LCA platforms so significant: they reduce the time and expertise barrier that has historically kept rigorous carbon measurement out of reach for most brands.
Frequently Asked Questions
Q: What is climate change and why does it matter for businesses? A: Climate change refers to long-term shifts in global temperatures and weather patterns, primarily driven by human greenhouse gas emissions. For businesses, it creates both physical risks, disrupted supply chains, extreme weather events, and transition risks, including regulatory obligations under frameworks like the CSRD that require companies to disclose and act on their climate impact.
Q: How does Life Cycle Assessment (LCA) relate to climate change mitigation? A: LCA quantifies the greenhouse gas emissions associated with every stage of a product’s life, from raw materials to disposal. By identifying the hotspots where most emissions occur, companies can make targeted decisions, reformulating ingredients, switching suppliers, redesigning packaging, that translate directly into measurable reductions in climate impact.
Q: What EU climate regulations apply to companies in 2026? A: The most important frameworks currently in force or imminent are the CSRD (mandatory GHG reporting including Scope 3 for qualifying companies), and the Empowering Consumers for the Green Transition Directive (ECGT), which from September 2026 bans generic green claims and offset-based “climate neutral” labels. The EU Green Claims Directive proposal was paused in June 2025, but the ECGT remains fully in effect.
Q: How can a company start measuring its product carbon footprint? A: The starting point is adopting an LCA methodology aligned with ISO 14040/44 and ISO 14067, which govern the calculation of product carbon footprints. Platforms like Devera automate this process, enabling brands to generate credible, ISO-compliant carbon data across their product portfolio without requiring deep technical expertise in-house. You can learn more at Calculate your product carbon footprint.
Start Measuring What Matters
Climate change is no longer an abstract risk horizon, it is a present-day business reality, backed by the clearest scientific record in history. The regulatory direction is set: companies that can quantify their environmental impact at the product level, communicate it credibly, and use it to drive real reductions will lead the next decade of sustainable business.
Devera is an AI-powered platform built specifically to make that possible. By automating LCA calculations following ISO 14040/44, Devera helps brands across the cosmetics, personal care, and consumer goods sectors generate accurate product carbon footprints, fast, compliantly, and at scale. Whether you are preparing for CSRD disclosure, responding to retailer demands, or building a credible sustainability narrative, Devera gives you the data to act with confidence.
Ready to move from guesswork to measurement? Calculate your product carbon footprint or explore Devera’s pricing to find the right plan for your team.