A clear majority of global CEOs have not factored the threat of climate change into their strategic risk management activities, while a large hardcore rump still does not even acknowledge there is a problem, according to a study from PriceWaterhouseCoopers.

This year’s annual global CEO survey from PWC reported only a modest increase on the number of CEOs who see climate as an extreme threat, and revealed a solid group of more than a quarter who express few or no concerns.

At least climate change made the top 10 lists of threats this time around — last year it didn’t even do that.

Addressing the issue at the launch of the report, PriceWaterhouseCoopers chairman Robert Moritz said that while this is a topic that is discussed worldwide, the issue of climate has risen slightly, but not prominently, in the minds of the CEOs. 

“What is surprising, though, is even with that rise, about 60 per cent of those CEOs that we serve have not built into their strategic plans the issue of climate, and what they should be doing differently.”

He said this is a cause for concern around the risk and the threat, versus the realities of action and outcomes that they’re looking to achieve.

Leaders and laggards

“So the challenges are many. And with that in mind what we see in organisations today is there is a big difference between those that are moving with speed and agility to react to the uncertainties that are out there. And yes, there definitely are risks, but also opportunities that the CEOs are seeing.”

According to the report, “Last year, 24 per cent of CEOs selected climate change as an extreme concern; this year, it was selected by 30 per cent. This may seem like a notable jump, but in the context of rising anxiety about nearly all threats, it represents just a marginal increase.

“In fact, at a country level, our results show a moderately negative correlation between exposure to natural hazards and companies’ preparedness for climate-related risk. Companies in the countries with the most exposure — which are generally among the largest contributors to CO2 emissions — are less likely to have embedded climate change into their overall risk management approach.”

The decarbonisation imperative is particularly challenging for certain industries and regions, according to the authors of the PWC study.

The report quotes Jeroen Drost, CEO of SHV Holdings, one of the largest family-owned businesses in the Netherlands, with operations in 58 countries and territories and holdings in transportation and oil, among other sectors on the issue.

“We’re very focused on bio-based and renewable fuels, and our goal is to supply 100 per cent renewably sourced energy by 2040.  … But at the moment, that’s just not possible. It’s an illusion to think that the world could do without oil and gas.” 

There is some good news though. The pandemic has not caused companies to abandon commitments such as net-zero commitments.

“Despite extraordinary challenges, 2020 brought a burgeoning number of net-zero commitments,” the authors note. “Although business participation continues to lag government targets, CEOs are pushing for greater reporting: When asked which areas of their business they should be doing more reporting on, 43 per cent  of CEOs chose environmental impact, the greatest share of any area.”

The authors argue that if CEOs embrace emissions accountability — “And start applying the same rigour typically reserved for financial reporting” — they believe more meaningful climate action should follow.

Image credit: Photo by Markus Spiske on Unsplash

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