CEOs react to climate change based on cost efficiency, risk management

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Following research by PwC earlier in the year that showed CEOs seeing more opportunities for growth today than there were three years ago, PwC polled international business leaders on their views on growth prospects in the context of climate change.

The results suggest an emerging group of leading CEOs, confident about economic growth prospects more widely, forming a business case for action on climate change based on cost efficiency, stronger risk management and new market opportunities.

Main findings

• Three out of five CEOs surveyed say they are acting on climate change to create a reputational advantage.
• Over half are motivated by improving shareholder value (53%) and building trust in their organisation (52%).
• 58% say their companies are partnering with suppliers and business partners to address climate change risks and opportunities; 55% with consumers.
• 89% have made energy efficiency improvements; 74% have set recycling targets.
• 61% have changed how they monitor and manage risk.
• 49% having board level discussions on climate change once a year or more.

“80% of CEOs told us what motivates them personally on climate change is their desire to protect the interests of future generations. But look beneath this headline and you see a smaller, emerging group of leading CEOs making the connection with growth, costs, risk and shareholder value," Jayne Mammatt, partner at PwC sustainability and climate change, said.

"Far more need to be motivated by business as well as moral issues, and make the connection between climate change and financial performance, particularly in the context of an ambitious deal on climate change this year."

Tick list

“Today’s short-term issues, such as energy cost and regulatory concerns, will become tomorrow’s longer-term and strategic threats to competitiveness and growth. The implications of a changing climate are a tick list of critical business issues ranging from commodity pricing and energy, to logistics and sourcing, to investment, talent and customer retention.”

With less than 100 days to the UN Climate Summit in Paris (COP21) in December, an international agreement on climate change looks set to increase both the risks and opportunities of a changing climate for global companies. Among the main concerns identified in the survey:

• CEOs’ top climate concerns are impacts on energy prices (61%) and the potential increase in government regulation (56%).
• Longer-term climate impacts are a lesser concern with impacts on supply chains and infrastructure at 51% and 35% respectively

The most important drivers for climate action for CEOs identified are greater public awareness and engagement (80%) and a clear, consistent and long-term national government policy framework (77%). In contrast, only 46% identified a binding agreement on climate change as the main driver for action in their sector.