Bottom line
The science has become more urgent, while corporate practice has become quieter and more compliance-driven. Companies are still investing, but the field is under strain. AI is a new emissions and measurement problem that most sustainability teams are only starting to address.
Implications for leaders
- Plan for a larger overshoot. Physical risk and adaptation need more weight in strategy.
- Close the evidence gap. Few companies can say targets are on track. Link materiality to risk management first.
- Build credibility, not volume. Quieter communication is fine, quieter delivery is not. The compliance push favours robust data and governance.
- Add AI to the footprint now. Put vendor disclosure requirements in contracts, set model-selection guidelines, and treat AI carbon estimates as directional.
- Prepare for nature disclosure. Map dependencies and impacts by location, and consider responding to the ISSB consultation before 19 February 2027.
- Support your team. Stalled pay and falling job satisfaction put talent retention at risk.
1 Shape
The climate backdrop is worse than last year
The 1.5°C goal can no longer be met with no or limited overshoot. Getting back to 1.5°C by 2100 is still possible (about a 50% chance), but only after warming peaks at about 1.7–1.8°C around mid-century, and only with far deeper cuts than countries have pledged. Today's pledges point to 2.6°C by 2100 instead.
| Year | Needed: the 1.5°C path cut vs 2025, lowest 1.5°C overshoot pathway | What pledges deliver cut vs 2025 if new NDCs are fully implemented |
|---|---|---|
| 2030 | 18% | 5–8% |
| 2035 | 45% | 11–15% |
| 2040 | 69% | 20–27% |
- Pledges leave the world off track. Even if every NDC is delivered, warming is on course for 2.6°C by 2100 (66% chance). On current policies it is about 2.8°C, and still rising after 2100.
- Emissions are flat, not yet falling. Global emissions were 58.4 GtCO2e in 2025, essentially flat, but it is too soon to call a plateau or a peak.
- Carbon removal carries much of the plan. The lowest overshoot pathway needs roughly 320 GtCO2 removed this century, which is technologically uncertain.
- There is real momentum. In 2025, renewables out-generated coal globally for the first time, and evaluations of more than 220 policies show climate policy reduces emissions. Electricity-sector policies averaged about 9% reductions.
- Data centres are a small but growing slice. They are under 1% of emissions today, and their electricity use is projected to roughly double to over 900 TWh by 2030.
What this means in India
India's NDC for 2031–35 commits to cutting the emissions intensity of GDP by 47% by 2035 from 2005 levels and to 60% non-fossil power capacity by 2035, on the way to net zero by 2070 (Cabinet release, 25 March 2026). For Indian companies, a bigger global overshoot means more heat and water stress at our own sites, so I would bring physical-risk and adaptation planning forward rather than wait for the policy picture to settle.
Source: UNEP, Emissions Gap Report 2026: The point of return (PDF)
2 Disclose
Corporate reporting is maturing, but implementation evidence lags
Across 194 company reports, nearly all firms describe their strategy well, but far fewer show proof of progress.
- Materiality is now standard practice. 92% run a materiality assessment and 78% explicitly apply double materiality, but only 49% clearly link it to enterprise risk management.
- Strategy is widely documented. 93% have a company-specific sustainability strategy aligned with corporate strategy.
- Proof of progress is the weak spot. 60% provide a transition plan and 51% disclose sustainability-related financial information. Only 33% clearly report whether targets are on track, though 45% are open about underperformance.
What this means in India
In India, BRSR Core assessment or assurance reaches the top 1,000 listed companies from FY 2026-27 (SEBI circular, 28 March 2025). That turns the proof-of-progress gap into an assessor's question, not just a reader's. Start with the E&S metrics you will have to evidence, and make sure each has an owner, a source of record and a sign-off.
The profession is staying the course, with strain
A survey of 500+ sustainability professionals at firms with $1B+ revenue shows investment holding, but with pressure on people and a shift towards compliance.
- Investment holds but is polarising. 46% increased sustainability headcount and budgets over two years, and 25% cut them.
- Targets mostly survive. Of companies with public targets, 57% maintained them, 24% strengthened them and 16% weakened or abandoned them.
- Companies talk less and focus on compliance and risk. 63% scaled back or rethought sustainability communications, 58% prioritise compliance more, and 53% say social issues have become less important.
- People are under pressure. 44% say their jobs are less fulfilling than two years ago, and 33% say more fulfilling. Only 47% see corporate sustainability as the most attractive career path for the next 5–10 years. US pay growth slowed, and senior pay slipped slightly.
- Optimism persists. Twice as many respondents were optimistic as pessimistic.
What this means in India
The compliance load is landing on small teams in India too: BRSR Core assessment or assurance is widening, and value-chain ESG disclosures are voluntary for the top 250 listed companies from FY 2025-26 (SEBI circular, 28 March 2025). I would invest in the people who own E&S metrics, and bring finance, procurement and plant teams into the work, so it does not rest on one or two people.
Source: Trellis, State of the Sustainability Profession 2026
AI is the emerging blind spot
Tools to measure AI's energy, carbon and water footprint are early, and the data from model providers is thin.
- Measurement tools are early. CLEER, Carbonlog, the AI Energy Score and Watershed's token-based framework exist, but frontier-model emissions data is largely opaque. CLEER estimates it from open models.
- Be cautious with AI carbon-footprinting tools. Watershed's study found they were within two multiples of expert answers only 77% of the time, and less accurate than manual methods.
- Indirect water use is the bigger issue. On-site cooling is only a fraction of the total. In a Ceres analysis of seven US states, indirect use from power generation could exceed 79% of data-centre water use by 2030.
- AI video is energy-intensive. A few seconds of generated video can use at least 1,000 times the energy of a chatbot prompt.
- Procurement is the main lever. The Business Council on Climate Change has published sample vendor questions and contract language. GitLab, SAP, Okta and Salesforce are building AI emissions into contracts, project screening, usage guidelines and model fact sheets.
- Lighter models are an option. Tools like the Frugal AI Switchboard list lower-energy open-source alternatives.
What this means in India
BRSR already asks for energy and water figures, and for Scope 3 emissions as a leadership indicator (SEBI BRSR format). AI run in your own facilities shows up in the energy and water lines; AI bought as a cloud service sits in Scope 3. Ask IT and cloud vendors for usage and emissions data now, and write it into contracts, rather than chase it at year-end.
Source: Trellis, Sustainable AI: tools, frameworks and best practices
5 Disclose
Nature is next on the disclosure agenda
On 22 October 2026 the ISSB proposed nature-related disclosure requirements, with comments open until 19 February 2027.
- Deliberately non-mandatory. A Practice Statement drafted like a Standard; companies need not comply with it to state compliance with ISSB Standards. The ISSB asks whether to finalise it that way or as a Standard.
- Focus is investor-relevant nature risk, including how dependencies and impacts on nature give rise to risks and opportunities. IFRS S1 appliers must already disclose material nature-related risks.
- Builds on TNFD (location; engagement with Indigenous Peoples, local communities and affected stakeholders). TNFD says its technical work is complete.
- Designed to connect nature to climate and financial statements, and to work efficiently alongside GRI or ESRS.
- ISSB Vice-Chair Sue Lloyd: the approach gives markets time to implement IFRS S1 and S2 well while meeting investor demand for nature information.
What this means in India
India has not adopted IFRS S1 or S2, so BRSR remains the rule book for listed companies. BRSR already asks about operations in or around ecologically sensitive areas and about water use in water-stressed areas (SEBI BRSR format), which is a sound start on the location-based view the ISSB proposal builds on. ICAI's Sustainability Reporting Standards Board has invited Indian comments on earlier ISSB consultations for its own response (ICAI SRSB), one practical way to be heard.
Source: IFRS Foundation, ISSB consults on proposals for nature-related disclosures
Sources
- UNEP, Emissions Gap Report 2026: The point of return (PDF)
- WBCSD, Reporting Matters 2026: Insights and trends
- Trellis, State of the Sustainability Profession 2026
- Trellis, Sustainable AI: tools, frameworks and best practices
- IFRS Foundation, ISSB consults on proposals for nature-related disclosures
Figures are from the sources linked, as published.
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