New research from Deloitte highlights growing business concerns about climate change; reveals a mismatch between ambition and impact

NEW YORK, January 18, 2022 /PRNewswire/ — Released today, Deloitte CxO Sustainability Report 2022: The disconnect between ambition and impact, reveals that global C-level (or CxO) business leaders are increasingly concerned about climate change and see the world at a tipping point for action. Eighty-nine percent of CxOs agree there is a climate crisis and 63% say their organizations are very worried. Yet they struggle to fully integrate sustainability into their core business strategies, operations and cultures.

Recognizing the growing importance of sustainable development and the immense threat of climate change, Deloitte has relied on previous research engaging more than 2,000 CxOs in 21 countries to examine the concerns and actions of business leaders and companies related to climate change and sustainability. The report also explores the disconnect between ambition and business impact, as well as steps CxOs can take to start closing the gap.

“Tackling climate change is not a choice, it’s billions of choices,” said Punit Renjen, CEO of Deloitte Global. “No action is insignificant, but some activities and decisions ‘move the needle’ more than others, and these bolder actions by business leaders are needed now, while there is still time to damage control. It’s time to prove we’re up to the challenge.”

Concern and Optimism: Motivators for Change

The impacts of climate change weigh heavily on the minds of leaders. The majority (79%) of CxOs think the world is at a turning point when it comes to responding to climate change. That’s 20 percentage points more than one Deloitte survey carried out eight months earlier, underlining the growing importance of acting quickly. Additionally, 88% of CxOs are optimistic that with immediate action, the world can limit the worst impacts on the planet. It’s also higher than 63% eight months ago. The rise of concern, but also of optimism, shows that leaders are increasingly aware of the need to act now.

The data shows that CxOs are feeling tangible pressure on several levels:

  • Almost all respondents (97%) indicated their businesses have already been negatively impacted by climate change, and about half said their operations had been affected (for example, disruption of business models and supply networks around the world).
  • Eighty-one percent of CxOs have been personally affected by a climatic event (for example, extreme heat, worsening storms, wildfires) over the past 12 months.
  • In addition, stakeholder groups— including regulators, shareholders, consumers and employees — are all adding to the pressure to act.

“Climate change is no longer in the distant or even near future. It is here now and the choices we make today will determine the quality of life for generations to come,” said Jennifer Steinmann, global climate and sustainability market leader at Deloitte. “A better future depends on a deep and lasting change in attitude and behavior on the part of governments, companies and individuals. The business community can help model new forms of cooperation that identify the best ideas, whatever whatever their source, and create new solutions and will have the greatest impact for them, their stakeholders and their communities.”

Disconnects exist between ambitions, actions and impacts

Companies are take action: two-thirds of CxOs said their organizations are using more sustainable materials and increasing the efficiency of energy use; more than half have adopted energy-efficient or climate-friendly machinery, technology and equipment; and a majority of them intentionally reduce air travel and train employees on their actions and their impact on the climate.

However, companies are less likely to implement actions that demonstrate they have embedded climate considerations into their cultures and have the leadership buy-in and influence to effect meaningful transformation. While all sustainability actions are important, Deloitte’s analysis of the report identified five “in motion” actions that, particularly when taken together, demonstrate a deeper understanding of the business benefits of sustainability. They are:

  • Develop new climate-friendly products or services;
  • Require suppliers and business partners to meet specific sustainability criteria;
  • Modernize or relocate facilities to make them more resistant to climate impacts;
  • Integrate climate considerations into lobbying and political donations; and
  • Link executive compensation to sustainability performance.

Compared to other climate actions, companies are much less likely to have already taken all five actions, and more than a third of organizations do not have implemented more than one of them. While concern for the environment and optimism for change both remain strong, organizations will increasingly need to consider taking more decisive action to limit the worst impacts of climate change.

CxOs also chose brand recognition and reputation, customer satisfaction, and employee morale and well-being as three of the top four benefits of their companies’ sustainability efforts, suggesting that many CxOs see climate actions as beneficial to their relationships with their stakeholders. The lowest-ranked benefits (revenue from long-standing and new businesses, asset value, capital cost, and operating margins) suggest that CxOs continue to struggle with the near-term costs of transitioning to a low carbon future.

Lessons from sustainability leaders

Deloitte’s survey revealed a group of leaders (19% of the sample) whose organizations serve as role models for addressing sustainability efficiently and effectively, while reaping the benefits in return. These leading organizations have implemented at least four of the five “in motion” sustainability actions. Compared to organizations that have not implemented more than one (35% of the total (nearly double the group of leaders)), these leaders are:

  • More concerned about climate change (74% vs. 52%);
  • Expecting climate change to have a significant impact on their business strategies in the coming years (73% vs. 50%);
  • Plan to achieve net zero emissions by 2030 (82% vs. 50%);
  • Less likely to see cost as a barrier to sustainability efforts, indicating they may have a better understanding of the costs associated with inaction and have greater buy-in from leaders; and
  • More likely to understand the sustainability business opportunity for their bottom line, stakeholder satisfaction, and broader overall performance.

“Not all companies are at the same stage of their climate journey, but all companies will soon have to move from ‘why’ to ‘how’ with their own personalized approach,” Renjen says. “However, these actions are important markers of leadership because they require having a mindset that sees both the risks of inaction and the opportunity for sustainability, a culture that embeds climate directly into the corporate strategy, buy-in from senior management and the ability to influence third parties, including business partners, government and regulators.”

To learn more about Deloitte’s CxO 2022 sustainability report, please visit Deloitte website.

MethodologyThe report is based on a survey of 2,083 C-level executives. The survey, conducted by KS&R Inc. and Deloitte, in September and October 2021, interviewed respondents from 21 countries: 44% from Europe/South Africa South ; 31% from the Americas; and 24% from Asia-Pacific. All major industrial sectors were represented in our sample. Additionally, KS&R and Deloitte conducted selected one-on-one interviews with global industry leaders.

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