Many Leaders See Climate Measures as a Way to Strengthen Stakeholder Connections

The seriousness of the consequences of climate change we are witnessing is highlighted by Deloitte’s research involving two thousand executives from companies in 24 countries, where respondents consider it one of the ‘three main issues’, ahead of seven others, including innovation, talent competition, and supply chain challenges. In fact, only economic prospects were ranked slightly higher. Moreover, 75 percent of them stated that their organizations increased their investments in sustainability over the past year, many significantly.

If there was any doubt that climate change is a permanent part of the business agenda, the increased focus on sustainability should dispel it. However, the path to a more sustainable future will require time, business investments, and will be driven by new and innovative technologies and creative approaches. It is promising to see C-level leaders prioritizing sustainability and increasing their investments to be at the forefront.

It is indicative that almost all surveyed believe their organization has felt the impact of climate change, whether it is ‘resource scarcity/resource costs’ as the main issue already affecting their societies, changes in consumption patterns or climate-related preferences, or emissions regulation. Additionally, about one-third of executives said that climate change negatively affects the physical and mental health of their employees.

Yet Optimism

In addition to the impact on their business and stakeholders, as many as 82 percent of executives stated that they have personally been affected by climate events, with extreme heat being the most frequently cited problem, and that they feel concern about climate change all the time or most of the time. Despite these concerns, the majority believe that both their societies and the global economy can continue to grow while achieving climate goals and reducing greenhouse gas emissions. Leaders should also leverage their optimism to achieve sustainable, measurable impact, which will require enhanced efforts in climate change adaptation while facilitating innovations that ensure a just transition for all stakeholders.

Brand recognition and reputation, customer satisfaction, and employee morale and well-being are three of the four main benefits of sustainability efforts, suggesting that many executives see climate measures as a way to strengthen stakeholder connections. The lowest-ranked benefits (all financial) suggest that executives are still struggling to define the long-term financial opportunities that sustainability measures offer.

Measures and Challenges

The measures companies are taking towards sustainability primarily relate to increased use of sustainable materials, enhancing energy efficiency, educating employees about climate change, and somewhat fewer are developing new climate-friendly products or services. Efforts to adapt to climate change are also being intensified: changing or relocating facilities to be more resilient to climate change, purchasing insurance against extreme climate risks, and providing financial assistance to employees affected by extreme weather conditions.

However, companies are less likely to take actions that demonstrate they have integrated climate considerations into their culture and that they have the support and influence of senior leadership to make a more comprehensive transformation. For example, 21 percent of executives indicated that their organization does not plan to tie compensation for senior executives to environmental sustainability performance, and 30 percent stated that they do not plan to lobby the government for climate initiatives. Furthermore, when asked how serious certain groups are in addressing climate change, only one-third of respondents said they believe the private sector is very serious. It is almost asserted that the difficulty in measuring their organizations’ impact on the environment is the main barrier to enhanced action, and nearly one-fifth cited costs and a focus on short-term issues as obstacles.

Recommendations for Acceleration

Despite everything, executives believe that both their organization and the global economy can continue to grow while achieving climate goals and reducing greenhouse gas emissions. So, how can they help close the gap between aspirations and impact, break down barriers to greater action, and begin to balance the short-term costs of climate initiatives with long-term benefits?

The survey offers several recommendations to assist executives starting corporate sustainability, including embedding climate goals into the overall strategy and purpose of the business, building trust by taking credible climate actions, empowering boards, encouraging stakeholder action, investing in today’s (and future) technologies, and collaborating to drive system-level change.