What a World Beyond 1.5°C Demands of Companies

November 4, 2026 / Laise Mondo, Melina Amoni and Rafael Della Barba

The Earth’s average temperature is expected to rise by more than 1.5°C in the coming years, and current national targets are not sufficient to prevent this. In our view, this scenario increases the private sector’s responsibility: climate targets must be accompanied by plans, investment, and measurable results.

A world beyond1.5°C

On September 2, 2026, the United Nations Environment Programme (UNEP) published “Limiting Overshoot”, the first report dedicated to the consequences of exceeding 1.5°C. The conclusion: this threshold is expected to be crossed in the coming years. In the most optimistic scenario, warming reaches about 1.8°C before declining, but most other scenarios indicate higher peaks. The task now is to limit the intensity and duration of this overshoot through immediate cuts in GHG emissions — including methane — well-governed carbon removals, and adaptation measures.

Observed data already point in this direction. According to Copernicus, 2024 was the warmest year on record, at about 1.6°C above pre-industrial levels, and the average for 2023–2025 was the first three-year period to exceed 1.5°C. The World Meteorological Organization (WMO) estimates a 91% chance that at least one year between 2026 and 2030 will exceed this threshold. It is worth noting that individual years do not mean that the limit set by the Paris Agreement — which refers to the long-term average — has been breached. However, long-term projections reinforce the warning: with current NDCs, the world is heading toward 2.3°C to 2.5°C; with current policies in place, toward 2.8°C (Emissions Gap Report 2025).

This does not render the 1.5°C target irrelevant. Every additional tenth of a degree increases losses and the risk of points of no return, and every year above the threshold increases the amount of carbon removals that will be needed later.

The role of the private sector in the face of insufficient NDCs

The gap between the NDCs and what science indicates is often viewed as a problem for governments. This view is incomplete. National targets set the direction, but most of the decisions that drive emissions — such as where to invest, which technology to adopt, and which suppliers to contract — are made by companies. According to UNEP’s Emissions Gap Report 2025, aligning with the 1.5°C pathway would require reducing global emissions by 55% by 2035, compared to 2019 levels. Even if all NDCs were fully implemented, however, the world would still be on track for 2.3–2.5°C of warming. In other words, the regulatory minimum is not enough, and the private sector needs to go beyond it.

In Brazil, the line between voluntary and mandatory action is also shifting. The Brazilian Emissions Trading System will make part of this agenda mandatory for major emitters, and companies that act early will have more time to plan the transition and incur lower compliance costs.

There is also a ripple effect. The Scope 3 targets of major buyers and the climate requirements of banks and investors are placing pressure on suppliers who have never made public commitments. For most Brazilian companies, the pressure to implement these measures is likely to come first from customers and financiers rather than from regulation. Any company entering these discussions without a consistent inventory and a plan — or with only a stated target — is likely to lose ground in contracts and financing terms.

The problem isn’t a lack of targets

Commitments have grown much faster than delivery. According to the Net Zero Stocktake 2025, 1,245 of the world’s approximately 2,000 largest companies have net-zero targets, up from 417 in 2020. Only 7% meet all minimum integrity criteria, and 385 do not have a clear plan to meet them. In the SBTi’s Business Ambition for 1.5°C campaign, about 30% of companies had their commitments removed for failing to submit validated targets by the deadline.

Standards are evolving. Version 2.0 of the SBTi’s Corporate Net-Zero Standard, published in June 2026 and mandatory for new targets starting in 2028, organizes targets into five-year cycles, assesses compliance at the end of each cycle, requires third-party verification for the largest companies, and mandates a transition plan. It also makes it explicit that carbon credits do not substitute for reductions in the emissions inventory. As a result, the validation of a target becomes the start of an accountability cycle.

At the same time, the political environment has become more adverse. The United States’ withdrawal from the Paris Agreement, political pressure on the ESG agenda, and declining participation in voluntary alliances have led companies to lower their targets or stop discussing them altogether. Revising a target in light of new data is legitimate, provided that the assumptions and new deadlines are explained. What undermines the credibility of the corporate agenda is abandoning targets without explanation or keeping them in reports without projects to support them. Investors, lenders, customers, and regulators are increasingly attuned to this distinction.

The credibility test

A climate target gains credibility when the company can demonstrate:

short-term interim targets, not just a distant target year;

decarbonization projects with a timeline, responsible leadership, and an approved budget;

capital expenditures (CAPEX) consistent with the stated trajectory;

climate targets linked to executive compensation and overseen by the board;

annual progress reporting, with external verification;

carbon credits as a supplement, never as a substitute for emissions reductions;

public explanation of deviations and course corrections.

Without these elements, a target is unlikely to hold up in the eyes of investors, lenders, and auditors.

Transition plan

The transition plan is where the promise becomes a decision. It must translate the target into projects, costs, funding sources, deadlines, and responsible parties, integrated into the budget cycle and capital allocation. In a world where temperatures exceed 1.5°C, the plan must also address two objectives simultaneously: keeping decarbonization on track for 1.5°C and preparing the company for a climate even warmer than that threshold. To fulfill this role, the plan must be reviewed by the board, finance, and operations departments, and not be confined to the sustainability report.

This requires that physical risk analysis test scenarios of 2°C or higher, because assets, supply chains, and surrounding communities will be exposed to more frequent and intense events, regardless of each company’s specific target. In practice, this means incorporating long-term climate projections into decisions regarding assets with long useful lives, reviewing insurance and business continuity assumptions, and mapping critical supply chain dependencies. Since mitigation and adaptation compete for the same budget, a well-developed plan makes clear how this allocation is made and which risks the company decides to retain.

The current context reinforces this integration. COP30 approved a commitment to triple funding for adaptation by 2035, and UNEP estimates that developing countries will need $310 billion to $365 billion per year — 12 to 14 times current international public flows. In Brazil, the Climate Adaptation Plan stipulates that federal infrastructure investments must account for climate risks in their contracts. In the area of disclosure, the IFRS Foundation has already published guidance on transition plans under IFRS S2, and companies that adopt the Brazilian Sustainability Pronouncements Committee (CBPS) report must maintain it for at least three fiscal years, with the “comply or explain” requirement taking effect in 2027 (CVM Resolution 244/2026).

The question that matters

The question every company should answer in its next report is not “What is our target?” but “What have we delivered this year, how much have we invested, and what remains to be done?”. In a world expected to exceed 1.5°C, ambition remains essential. What now sets companies apart is their ability to demonstrate implementation.

WayCarbon supports companies and governments in this transition from targets to execution: from inventory and climate risk analysis to the design of decarbonization pathways, transition plans, governance, and reporting. Read our cases.