Powering the Shift: How CEOs from Hard-to-Abate Industries are Decarbonizing their Value Chains

Industry TrendsSustainable LeadershipTechnology and InnovationSustainabilityBoard Composition and SuccessionDigital TransformationIndustrialSustainability OfficersBoard of DirectorsChief Executive Officers
min Report
+ 1 author
June 26, 2024
11 min
Industry TrendsSustainable LeadershipTechnology and InnovationSustainabilityBoard Composition and SuccessionDigital TransformationIndustrialSustainability OfficersBoard of DirectorsChief Executive Officers
Decarbonization is now one of the most pressing issues of our time. We look at how organizations in hard-to-abate sectors are delivering a cleaner, greener future.


Leaders in hard-to-abate sectors face an existential challenge as their companies reckon with the global energy transition in a bid to limit greenhouse gas emissions, mitigate climate change, and deliver on growing pressures from regulators and investors.

While these companies have much to gain from decarbonization, owing to their high carbon footprints, the path ahead is complex, with few quick wins and many difficult trade-offs.

So, how are companies in hard-to-abate industries creating value and delivering on the expectations of stakeholders by pivoting their businesses toward a greener, cleaner future?

To answer this question, we met with 27 CEOs and senior executives across hard-to-abate sectors, including construction, aviation, manufacturing, power, and shipping, to understand where companies are on their decarbonization journey and how their pursuit of decarbonization has impacted their leadership decisions.

Here, we share the biggest challenges they’re facing in their decarbonization efforts—and the accelerators that are helping drive progress at scale.


Decarbonization is an urgent, but complex, challenge

The CEOs we spoke with were committed to unlocking the decarbonization opportunity. Yet various factors influenced the level of urgency with which they were grasping this moment, including the scale of regulatory pressures in their geography as well as levels of interest in sustainability among the end-customer population.

Through our conversations, they highlighted barriers that were hampering their efforts, which typically fell into four key areas.

Leadership gaps

Insufficient board and shareholder understanding of the business case / opportunity. 

Tech deficit

Advances in technology have not kept pace with decarbonization ambitions.

Customer appetite

Moving faster than customers, who are not yet willing to pay premiums for greener products. 

Government support

A lack of long-term thinking among governments and policymakers. 

Yet CEOs revealed that they are looking beyond these obstacles and aiming to seize the opportunities of decarbonization. They understand that adopting greener, cleaner practices and products—both within their companies and throughout their supply chains—will be a route to innovation, resilience, and competitive advantage. Our conversations with these CEOs revealed four distinct accelerators to progress that were integral to unlocking the value of decarbonization:

  • Being led by a sustainability-minded CEO
  • Integrating decarbonization across business strategy
  • Establishing the right culture and incentives to foster innovation
  • Working with ecosystem partners



The energy transition should be viewed as a huge suite of opportunities…not a threat.”

CEO, energy services company


Accelerator 1: Being led by a sustainability-minded CEO

Our conversations with CEOs highlighted a clear takeaway: the biggest factor influencing a company’s decarbonization progress was the conviction of its CEO. As one told us, “If you delegate ownership of decarbonization too low down in the organization, people won’t have the courage to take the hard decisions that are needed.”

We know that companies stand the best chance of decarbonization success when actions are led from the top—by leaders who possess the vision and courage to make bold moves, navigate difficult trade-offs, and ultimately bring their entire organization along on the journey. Our research shows that companies with a CEO who is publicly committed to sustainability are 233% more likely to say their leadership team is prepared to respond to climate change and environmental damage. Even more notably, these companies are 24% more likely to outperform total shareholder return benchmarks in their industry when compared to those with non-publicly committed CEOs.

When Russell Reynolds Associates worked with the United Nations Global Compact to analyze the CEOs who successfully led sustainability transformations, we found they possessed a unique set of attributes and competencies—from having a mindset that recognizes the interconnectivity of the business to the world around it, to adopting four key capabilities relating to dealing with complexity, collaboration, courage, and long-termism.


The Model of the Sustainable Leader

The Model of the Sustainable Leader

Source: Leadership for a Decade of Action, Russell Reynolds Associates, 2020


Our Sustainable Leadership Model held true with the CEOs in hard-to-abate industries who had made the most progress on decarbonization. Across the board, many saw it as their mission to ensure their companies survive and are still operating 100 years from now. One CEO, intentionally sought to join a company that was prioritizing decarbonization, having been inspired by the international climate policy goal of limiting global warming to less than two degrees Celsius compared to pre-industrial levels. For these CEOs, decarbonization is not a nice-to-have, but a must-have.



[Sustainability] is only taken seriously by the organization if the CEO is fully involved.”

CEO, manufacturer of building materials


Accelerator 2: Integrating decarbonization across business strategy

It is clear that the CEOs who have been most successful on their decarbonization journey are incorporating sustainability across their company purpose and strategy. As Lynn Good, CEO of Duke Energy told us in our Sustainable Leadership book, “Sustainability is not an adjunct; it’s not another initiative; it’s not something we keep track of on the side. Rather, it is completely integrated with the overall strategy of the company, which is to be a leader in the clean energy transition.”

When CEOs commit to putting decarbonization at the heart of purpose and strategy, it becomes integrated in all the company does. There is no need for a separate sustainability strategy because you have a sustainable business strategy. Profit and purpose are seen to go hand-in-hand and critical to the company’s enduring success. As one CEO told us, “ESG used to be just a reporting exercise. Now it’s become a value-added exercise.”

Seeing decarbonization as a driver of value creation is critical to mitigating short-term thinking and ensuring that necessary capital investments are made in innovation. In some cases, we even heard how CEOs had used decarbonization as an opportunity to turn around poor business performance—a justification for investment and strategy to offer more sustainable products.



Sustainability is not just an ethical obligation, it is also a strategic advantage, as it aligns with the evolving values of our customers and partners.”

CEO, science company


However, we also heard how CEOs’ long-term outlooks—a core requirement for successful decarbonization—are facing pressure as investors increasingly focus on short-term gains in the wake of geopolitical crises in Ukraine and Middle East, as well as growing economic volatility and interest rates. One CEO had sought to overcome this by purposefully choosing investors with a more long-term view, which has smoothed the way to making the decarbonization investments they needed to make. Overall, while CEOs recognize that trade-offs are inevitable, delivering decarbonization gains in a world that prioritizes short-term thinking continues to present challenges.


Accelerator 3: Establishing the right culture and incentives to foster innovation

Decarbonization requires a high degree of innovation and, in turn, risk-taking. However, this doesn’t always align with the traditional cultures and mindsets of companies in hard-to-abate industries, which - owing to health and safety concerns - have typically prioritized minimizing risks.

Changing culture takes time and has various organizational implications that CEOs need to be mindful of. A key area is how to organize your R&D function. If you place R&D within your legacy business, risk-averse cultures may hamper innovation. If you set it up as a stand-alone division, you may struggle to secure buy-in from the business. The CEOs we spoke with had adopted different models to address this challenge, including moving talent between divisions to foster engagement in innovation. One CEO asked the team that led its biomass transformation to also lead its carbon capture business. This team had the confidence to progress this second project because of their previous success and were therefore more willing to innovate and take risks than other teams across the business.

Another CEO at a power generation company shared how their culture, which emphasized safety, precision, and risk management, had hamstrung their decarbonization transformation efforts. Rather than trying to fight against the risk-conscious culture they had spent years cultivating in their existing business, the company restructured to create a new business unit that could prioritize innovation in the exploration of new sustainable product offerings. The new business unit prioritized hiring a different profile of leader that indexed more highly on innovation over risk orientation, and the team was given latitude to manage risk differently than the rest of the business, Clear signaling and commitment from the CEO ensured that the new business unit would not be sidelined. In doing so, the company was able to preserve the valuable culture already in place while complementing it with a new structure.

Cultural change can also be driven by incentives. The companies that have come the furthest have made decarbonization targets part of their organization’s incentive programs. One company set an internal price of carbon at two times the market rate in order to drive the desired behaviors, and then tied individual performance bonuses to decarbonization targets. As a result, the company found that their Chinese business – the region with the seemingly hardest to decarbonize operations – became the first to meet the company’s 100% clean energy targets.



We had to make it clear that everyone was going to be held to the standards, even if their business line didn’t have big CO2 emissions…That was a very important move, otherwise everyone ends up moving a different speeds. Everyone needs to be moving in the same direction.”

CEO, manufacturer of building materials



Our conversations also highlighted that finance was an important function to not only hold the business accountable for good decisions but also looking at accounting methods linked to decarbonization experimentation and transformation. CEOs also spoke of the need for “patient capital”—an investor’s willingness to forgo immediate return in anticipation of more substantial returns over a longer time period—as a means to drive more innovation and risk-taking. Others shared how decarbonization now flows through investment decisions, with employees now needing to state the impact of projects on emissions as part of their pre-deal analysis. One CEO added how they have adopted a scorecard to ensure they hit their target of ensuring 55% of everything they sell is low / no carbon.


Accelerator 4: Working with ecosystem partners

Decarbonization is a multi-player sport, requiring entire ecosystems of businesses, governments, academia, and civil society to invent new technologies, acquire financing, manage data, and co-create solutions that generate value for all. Among the CEOs we spoke with, there was widespread recognition that a single company can only move so fast– and no company will be able to successfully navigate the energy transition on its own.



The solution is too big for one company to tackle. We have to work in an ecosystem that is a lot more open versus us holding our cards close to chest like it has been historically.”

CEO, oil and gas company


External partnerships offer several important benefits, depending on the nature of the collaboration and its constituents:

  • Identifying upstream and downstream opportunities to minimize emissions and reduce costs
  • Developing industry-wide standards and co-creating solutions to industry-wide challenges
  • Educating customers and other stakeholders on the benefits of decarbonisation
  • Staying up to date on technological innovations

It is important that companies understand the full spectrum of players in their ecosystem, and prioritize which relationships to foster at what stage of their own sustainability journey. For example, some relationships may benefit from formal joint venture or partnership agreements, particularly in industries whose value chain is highly dependent on developments in other chains. Others will find that a less formal partnership can yield the same benefits, in terms of gaining insight into the latest technological developments or understanding the likely path of future regulation.

Taking an ecosystem lens to a company’s value chain can also reveal new opportunities for investment. One airline CEO we spoke with highlighted a key pillar of the company’s strategy to become net zero by 2050: investing in companies building the green technologies that will be needed but do not yet exist, including sustainable aviation fuel, engine cleaners, and electrifying airport operations.


Seizing the opportunity ahead

With decarbonization offering sizeable benefits for companies in hard-to-abate industries, we know that those who move fastest will become the winners of tomorrow. Overcoming barriers to unleash transformation is first and foremost a leadership challenge. One of the biggest levers companies have in their arsenal is to appoint Sustainable Leaders into their CEO role, as well as leadership teams, who have the vision and courage to chart a new path forward—and inspire action at scale—for the benefit of their businesses, the industry, and the planet.




Catarina Curry is a member of Russell Reynolds’ Associates Sustainability practice. She is based in Stockholm.
Sarah Galloway co-leads Russell Reynolds Associates’ Sustainability practice. She is based in London.
Emily Meneer leads Russell Reynolds Associates’ Sustainability Knowledge team. She is based in Portland.
Chris Nicholson is a member of Russell Reynolds Associates’ Energy and Natural Resources practice. He is based in London.
Susie Sell is an Editor at Russell Reynolds Associates. She is based in Singapore.
Emma Telford is a member of Russell Reynolds Associates’ Technology practice. She is based in London.


The authors would like to express thanks to the 27 CEOs and senior executives who took part in this study:

  • Hakan Agnevall, Wartsila
  • Annica Bresky, Oersted
  • Bernard Delvaux, Etex
  • Herbert Diess, Infineon Technologies
  • David Dillon, CRH
  • Sebastien Dossogne, Carmeuse
  • Sean Doyle, British Airways
  • Dean Finch, Persimmon
  • Will Gardiner, Drax
  • Henriette Hallberg Thygesen, AP Moller Maersk
  • Nick Hampton, Tate & Lyle
  • Henrik Henriksson, H2 Green Steel
  • Ilham Kadri, Syensqo
  • Lars Kissau, BASF
  • Michael Lewis, Uniper
  • Chris O’Shea, Centrica
  • Peter Raby, Morgan Advanced Materials
  • Hilmar Rode, Sibelco
  • Simone Rossi, EDF Energy
  • Jon Stanton, Weir Group
  • David Thomas, Barratt
  • Ben van Beurden, Mercedes Benz
  • Fabienne Viala, Bouygoes UK
  • Dominik von Achten, Heidelberg Materials
  • Stefano Venier, SNAM
  • Huibert Vigeveno, Shell
  • Shai Weiss, Virgin Atlantic