At the beginning of the year a study found that CEOs of UK companies were far more concerned about the climate emergency than terrorism, populism or access to capital. PwC’s 23rd annual global CEO survey found that two-thirds (64%) of UK CEOs believe that the climate crisis is a threat to their business, with a quarter (25%) extremely concerned about the issue – a figure that has more than tripled since 2016, when only 7% of UK CEOs were extremely concerned.
Coronavirus was not on the list of threats when the data was collected. And while the human and financial costs have been catastrophic, our environment was one of the few beneficiaries – albeit only in the short term.
“CEOs were looking at climate change with much more urgency pre-Covid-19 and they need to hold firm on this fundamental shift in mindset. We’ve seen what reduced greenhouse gas emissions, better air quality, and regeneration in natural environments can look like, but the climate emergency is still exactly that – a crisis. Momentum is building around “build back better” and how post-crisis recovery and reconstruction can improve long-term resilience. It remains critical to halve global carbon emissions by 2030”, says Emma Cox, UK leader for climate change and sustainability at PwC, who noticed a significant step-change in prioritisation of climate risk by business leaders last autumn to navigate increased climate-induced uncertainty.
Before Covid-19 struck, Cox had noticed momentum building, with an increase in press coverage about the climate strikes and related public attention. “We saw various big climatic events such as floods and the Australian bush fires, plus the UK’s main political parties all put [adaptations to] climate change firmly in their manifestos when they went to the polls,” she explains. “By January 2020, when the annual meeting of the World Economic Forum in Davos took place, climate change was firmly on the agenda in board rooms as the key issue of the day. A couple of months later, lockdown took hold and attention was diverted understandably to pivoting operations, and keeping employees and customers safe. CEOs were in a different kind of survival mode.”
The postponement of COP26, the UN’s pivotal climate summit, that was due to be held in Glasgow this year, to November 2021, was inevitable. But, Cox says, organisations in all industries now have an opportunity to fundamentally reshape their role in securing our climate and preventing further ecological collapse.
PwC’s survey of CEOs showed that almost three-quarters of respondents (74%) believe that their response to climate crisis initiatives can be an advantage and more than half (51%) agree that these initiatives will lead to significant new product and service opportunities.
“A green recovery can stimulate the economy while creating jobs. Embracing technology and innovation will be instrumental to making big changes and building a more resilient system,” says Cox, “especially in the world’s largest economies where the need to reduce carbon emissions is the greatest.”
Cox hopes to start seeing CEOs make some “bold and progressive” decisions, but cautions that governments around the world will need to create an enabling environment for low-carbon economic growth for these decisions to pay off. PwC was among some 200 business signatories of a recent letter which called on the UK government to deliver a recovery plan that accounts for social, environmental, and climate goals.
After the 2008 global financial crisis, many countries and industries turned to carbon-intensive growth. We cannot afford to repeat this,” she explains. “The risks of climate change and transition are still there. We can’t look backwards, we have to look forwards.”
The survey, which interviewed 1,581 CEOs in 83 countries in September and October 2019, found that more than half (54%) of UK CEOs do not believe that they are seeing changes in international policies that will mitigate climate crisis risks. While only 21% of UK CEOs believe they are seeing effective change in this area, 36% do admit they have to do more themselves.
But successful adaptation isn’t solely down to either businesses or government. Collaboration is essential for real systems change, according to Cox. “We need to connect corporate action, sector-based action, investor action and government action in order to get the right regulatory framework to incentivise and reward the best innovation and behaviour change.” She explains that with the right strategies and support, businesses will feel emboldened to take more risks and make bigger pledges. “By working together, it’s possible to produce a virtuous circle rather than a spiral that drives people off in different directions.”
This year was set to herald a decade of decarbonisation and transformation like no other – in how business operates, how we work and how we produce goods. As the pandemic enters a new phase, Cox hopes this is front of mind. Business can be an important driver of climate action against the backdrop of the resetting and reopening of the economy post-Covid. This is a once-in-a-generation opportunity to build the carbon transition into everything we do and to set the world on a new course of action.