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EU CEOs Recognize Climate Change as Biggest Threat to Business; EU Workers Say, ‘They’d Better’

24% of EU CEOs believe their companies will be highly exposed to the impact of climate change in the next five years — a key insight, since 76% of young Europeans say the climate impact of prospective employers is an important factor when job hunting.

Published 1 year ago | About a 4 minute read

Image: Tiger Lily

European CEOs say exposure to climate change risk is the fastest-growing threat to businesses, according to a new PwC study. Nearly a quarter (24 percent) believe their companies will be highly or extremely exposed to the impact of climate change on a five-year outlook, with a certain or high probability of significant financial loss (compared to 14 percent on a one-year outlook); just 16 percent of EU CEOs said they will be only minimally exposed to the impact of climate change over the next five years.

PwC surveyed 1,254 CEOs in 20 EU member states (Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovenia, Spain and Sweden) in October and November of 2022. They shared that, while the threat of climate change is rising significantly, exposure to other threats is falling. As a result, climate change (24 percent) now ranks alongside macroeconomic risk (29 percent), geopolitical conflict (30 percent), inflation (30 percent) and cyber security risks (28 percent) as the key concerns facing the most senior business leaders over a five-year time horizon.

In response to the growing threat from climate change, EU CEOs have stepped up their efforts to mitigate the impact on their businesses and are now leading the way globally — with 75 percent implementing initiatives to reduce their company's emissions, compared to just 59 percent in the US and 70 percent in APAC. In addition, 71 percent of EU CEOs plan to introduce climate-friendly products or processes, compared to just 50 percent in the US and 65 percent in APAC.

"Our survey shows that CEOs are increasingly aware of the threat that climate change risk poses to 'business as usual,'” says Andrew McDowell, Strategy& Partner at PwC Luxembourg. “Climate change has joined the other major threats that CEOs need to address on an ongoing basis; so, they are taking decisive steps to mitigate the impact by refocusing their priorities for action and investment. EU CEOs clearly recognize the scale of the challenge that lies ahead, which is a really positive step forward and a reassuring sign that EU businesses are in good hands."

Nearly two in five EU CEOs surveyed support the need for radical change in their businesses — recognizing that their businesses won't be viable in 10 years if they continue on their current path. More than half (57 percent) are concerned about labor and skills shortages, saying they will impact the profitability of their businesses to a large or very large extent over the next 10 years. As a result, 70 percent of EU CEOs are investing in upskilling their company's workforce over the coming year.

This increased cognizance of the risks climate change poses to business is heartening on a number of fronts — but particularly in the face of the European Investment Bank (EIB)’s latest annual Climate Survey, in which three-quarters of young Europeans say the climate impact of prospective employers is an important factor when job hunting: 76 percent of Europeans aged 20-29 say the climate impact of prospective employers is an important factor when job hunting, and 22 percent say it is even a top priority.

This aligns with a recent survey of employees across the US and UK commissioned by Paul Polman, which found that the majority (66 percent UK, 76 percent US) want to work for a company that is trying to have a positive impact on the world; and despite economic uncertainty, 51 percent would consider resigning from their jobs if employers do not align with own values.

Other findings of the EIB’s latest Climate Survey include:

66 percent of respondents are in favor of stricter government measures to impose a change in personal behavior (72 percent of people under 30).
79 percent are in favor of labeling all food to help limit the impact on climate and the environment.
62 percent of Europeans say they would pay more for climate-friendly food.
56 percent would be in favor of a carbon budget system to set a cap on the most climate-damaging consumption (62 percent of people under 30).

“The outcome of the EIB Climate Survey shows that Europeans are willing to help fight climate change at the individual level. As the EU climate bank, we welcome this commitment,” says EIB VP Ambroise Fayolle. “We will continue to support the acceleration of the green transition — one in which everyone can play their part and where no one is left behind.”