Employee activism is specifically driving increased action, with more than half of CxOs saying employee pressure on climate matters led their organizations to increase sustainability actions over the last year; 24% said employee activism led to a “significant” increase. Regulation is also influential: 65% of CxOs said the changing regulatory environment led their organizations to increase climate action over the last year.
In line with last year’s report, CxOs chose brand recognition and reputation, customer satisfaction, and employee morale and well-being as three of the four top benefits of their companies’ sustainability efforts, suggesting many CxOs see climate actions as a way to strengthen stakeholder relationships. The lowest-ranked benefits (all financial) suggest CxOs continue to struggle to define the longer-term financial opportunities that sustainability measures offer.
Climate Action Continues, Challenges Remain
Organizations are taking action: 59% are using more sustainable materials, 59% are increasing the efficiency of energy use, 50% are training employees on climate change, and 49% are developing new climate-friendly products or services. They are also ramping up climate adaptation efforts: 43% are updating or relocating facilities to make them more climate change resistant; 40% are purchasing insurance coverage against extreme weather risks; and 36% are offering financial assistance to employees who have been impacted by extreme weather.
However, as seen last year, companies are less likely to implement actions that demonstrate they have embedded climate considerations into their cultures and have the senior leader buy-in and influence to effect meaningful transformation. For example, 21% of CxOs indicated their organizations have no plans to tie senior leader compensation to environmental sustainability performance, and 30% said they have no plans to lobby government for climate initiatives.
Organizations are taking action:
59% are using more sustainable materials, 59% are increasing the efficiency of energy use, 50% are training employees on climate change, and 49% are developing new climate-friendly products or services.
Additionally, when asked how serious certain groups are about addressing climate change, only 29% of CxOs said they believe the private sector is “very” serious. Nearly a quarter of CxOs said the difficulty of measuring their organizations’ environmental impact was a top barrier to increased action, and nearly one-fifth cited cost and focus on near-term issues as barriers.
And while many organizations are concerned about a “just transition”—which seeks to ensure the substantial benefits of transitioning to a low-carbon economy are shared widely and support those who stand to lose economically—prioritization of this issue varies considerably by region and country. The Asia Pacific region is especially focused on a just transition, while some European countries and the U.S. are less likely to see this issue as a priority.
How To Accelerate The Green Transition
Building Performance Standards: Raising The Bar For Sustainability
So, how can CxOs help close the gap between ambition and impact, break through the barriers to greater action, and start to balance the near-term costs of climate initiatives with the long-term benefits?
Deloitte’s report offers several recommendations to help CxOs get started, including embedding climate goals into their business’s overall strategy and purpose, building trust by taking credible climate actions, empowering the board, encouraging stakeholder action, investing in today’s (and tomorrow’s) technologies, and collaborating to drive systems-level change.
