CEOs see more opportunities for growth today than they did three years ago — especially when it comes to new products and services in response to climate change.
Earlier this year, survey results from PwC showed that global executives were more confident about growth than they had been in years, and 46 percent of CEOs agreed that resource scarcity and climate change were set to transform their business. New results released last week revealed that three-quarters of CEOs are now developing new products and services to respond to climate change, and a third said it is helping them grow their business.
"80 percent 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. 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,” said Laurent Rouach, Partner and Sustainability Leader at PwC Luxembourg.
Hopes are high that COP21, the United Nations’ climate summit happening in December, will result in a meaningful international agreement. PwC says the agreement could increase both the risks and opportunities of a changing climate for global companies.
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The surveyed CEOs reported that increased government regulation was a top climate concern, and concerns were even higher for impacts on energy prices. A global deal to limit emissions to meet a 2°C goal would lead to increased regulation which could cause energy costs to rise. Impacts on supply chains and infrastructure were also of concern, but to a lesser number of executives.
“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," Rouach says. “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.”
PwC suggests there is an emerging group of leading CEOs forming and strengthening the business case for climate action based on cost efficiency, risk management and new market opportunities. The surveyed CEOs reported that their personal motivations to drive business action on climate change were mainly intrinsic and reputational; they identified concerns for future generations (81 percent), creation of a reputational advantage (63 percent), and building trust in their organization (52 percent) as main personal motivators. However, about half also reported motivations more directly tied to a business case: improving shareholder value (53 percent), consumer demand (50 percent), resilience (44 percent), and talent (40 percent). Over half of these executives are partnering with suppliers and other business partners (58 percent) or with customers (55 percent) to address climate change risks and opportunities.
To drive climate action more broadly, CEOs identified greater public awareness and engagement and a clear, consistent and long-term national government policy framework as the most important drivers for climate action. Hopefully COP21 won’t disappoint.