Most CEOs Sticking with Climate Strategies, but Changing How they Communicate it: KPMG Survey

More than two thirds of CEOs report that they remain committed to their climate strategies, but are adapting the language and terminology they use to communicate it, and while many are not confident that their companies will achieve their near-term climate goals, most anticipate significant returns from their sustainability efforts over the next five years, according to a new survey released by global professional services firm KPMG.

For the report, KPMG’s 2024 CEO Outlook, KPMG surveyed 1,325 in markets across North America, Europe and Asia Pacific at large companies with revenues greater than $500 million.

The survey found that ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. remains high on the CEO agenda, with “execution of ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. initiatives” remaining in the top three operational priorities for the next three years, tied with “understanding and implementing generative AI across the business and upskilling their workforce,” and behind only “advancing digitization and connectivity” across the business.

The survey also found, however, that CEOs are becoming pressured to navigate an increasingly politicized landscape around ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. issues. Most notably, the survey found that 69% of CEOs reported that they have retained the same climate-related strategies over the last 12 months but have adapted the climate-related language and terminology that they use to meet changing stakeholder needs.

John McCalla-Leacy, Head of Global ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. at KPMG International, said:

“Only a few years ago, environmentalEnvironmental criteria consider how a company performs as a steward of nature., socialSocial criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. and governanceGovernance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. commitments were regarded as a badge of honor which was not necessarily integrated into company’s strategy. Today, our findings show that ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. is a top priority with purposeful, sustainable growth remaining a core ambition for global business leaders. However, in 2024, we’re seeing growing politicization and polarization of issues such as socialSocial criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. mobility and climate change, and this is creating fresh new challenges for CEOs who are already under pressure to perform. The good news is that this survey shows that CEOs are remaining steadfast on the importance of sustainability they continue to demonstrate resilience and agility, for example, shifting how they communicate their efforts, rather than ditching their commitments.”

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While companies are mostly sticking to their climate strategies, however, the survey found that many are not confident in their abilities to reach their climate goals. In the U.S.-focused portion of the report, for example, the survey found that only around half (54%) of CEOs are confident that their organizations will be able to meet their net-zero goals by 2030. Key barriers to the achievement of climate ambitions included the complexity of decarbonizing supply chains, and a lack of skills and expertise to successfully implement solutions, each cited by 24% of CEOs.

Paul Knopp, KPMG U.S. Chair and CEO, said:

“CEOs remain steadfast on their climate-related strategies, which they expect to deliver financial returns in the coming years. Reaching net-zero goals by 2030 is proving difficult due to challenges operationalizing those strategies, especially decarbonizing supply chains.”

Despite the outlook on meeting their climate ambitions, most CEOs remain upbeat on the impact of their sustainability efforts. In the U.S., for example, 60% of CEOs reported that they expect to see significant returns from their ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. investments in the next three to five years, including 24% expecting significant returns within one to three years. Additionally, 74% of CEOs said that they see their ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. strategy having the greatest impact on driving financial performance, and 26% see it having the greatest impact on attracting and retaining talent.

The survey also assessed CEOs’ perception of the top risks from failing to meet ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. expectations, with 24% of respondents globally citing giving their competitors an edge as the principal downside, followed by the threat to their own tenure at 21% and recruitment challenges at 16%.

Click here to access the global and U.S.-focused surveys.