Nearly all high-level executives at large companies around the world expect climate change to impact their organizations’ strategy and operations over the next three years, according to a new survey released today by global professional services firm Deloitte, with top issues already affecting their businesses including resource scarcity, changing consumption patterns and carbon taxes.

For the study, the 2023 CxO Sustainability Report: Accelerating the Green Transition, Deloitte and market research firm KS&R surveyed more than 2,000 C-level executives in 24 countries, across a broad range of industries and enterprise sizes, ranging from $500 million in revenues to over $10 billion.

The survey indicated that climate change has emerged as a top priority for senior executives, even as their companies face major geopolitical and economic disruption. Climate change ranked second in the survey’s list of top 3 most pressing issued to focus on over the next year, at 42%, behind economic outlook at 44%, and ahead of other high profile issues such as supply chain (33%) and competition for talent (34%).

Deloitte Global CEO Joe Ucuzoglu said:

“If there was any doubt that climate change is an enduring part of the business agenda, the increased focus on sustainability by leaders over the past year should put it to rest. In a year of continued uncertainty, disruption, and competing business challenges, leaders ranked climate change as a top issue.”

Nearly all of the executives surveyed stated that climate issues have impacted their companies over the past year, with 46% citing resource scarcity or cost of resources, 45% reporting changing customer consumption patterns or preferences, and 43% referring to emissions regulations such as carbon taxes or emission caps.

As climate change climbs on the list of corporate priorities, resource allocations to address these issues has grown, with three quarters of the executives indicating that their organizations have increased sustainability investments over the past year, including 19% who reported increases of 20% or more.

Key sustainability-focused actions reported by the survey respondents include the use of more sustainable materials, such as recycled materials or lower-emitting products, cited by 59%, as well as increasing the efficiency of energy use (59%) or developing new climate-friendly products and services (49%). Engaging employees has also become a key initiative, with 50% reporting training employees on climate change actions and impacts.

Despite these initiatives, Deloitte noted that some key actions are still not being pursued by many companies, only 44% of organizations requiring suppliers and business partners to meet sustainability criteria, and only a third tying senior leaders’ compensation to environmental sustainability performance.

The survey indicated that the executives are being compelled to act on climate change from a broad range of stakeholders, with more than two thirds reporting that they feel pressure on the issue from board members and management (68%), regulators and government (68%) and consumers (68%), and many reporting pressure as well from investors (66%) and employees (65%).

According to Deloitte, employees have become increasingly influential, with more than half of the executives surveyed reporting that employee activism has led to an increase in sustainability action at their organizations over the past year.

The survey also examined the key obstacles facing the organizations to their ability to drive sustainability efforts, with difficulty measuring environmental impact reported by 24%, followed by “too costly” at 19% and demands from investors to focus on near-term business issues by 18%. These obstacle appear to have eased over the past year, however, with more respondents to last year’s survey reporting each of these issues as obstacles – 30% reported impact measurement difficulties, 27% reported cost, and 25% reported near-term focus pressures as obstacles in the 2022 survey.

Deloitte Global Sustainability & Climate Practice Leader Jennifer Steinmann said:

“Our survey tells us that CxOs believe that both their organizations and the global economy can continue to grow while reaching climate goals and reducing greenhouse gas emissions. Leaders should also harness their optimism to drive sustained, measurable impact, which will require ramping up climate adaptation efforts while also facilitating innovation that ensures a just transition for all stakeholders.”

Click here to access the report.

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