PwC published their 27th annual CEO survey, exploring the plans and strategies leaders will be implementing to navigate challenges and opportunities in today’s business environment.
A key finding from this year’s survey is that the majority of companies are taking steps to reinvent themselves following last year’s survey which revealed 40 per cent of global CEOs believed their companies would no longer be viable in ten years if they continued on their current path. Reinvention is the key theme of this year’s report.
Climate considerations are a recurrent theme throughout the report. Compared to the last five years, CEOs are anticipating changes in their business associated with technology, customer preferences, and climate change. These three factors are expected to be a driving influence behind the reinvention of current organisations and the development of newer ones. When asked, 30 per cent of CEOs surveyed think climate change will drive changes to the way their company operates in the next five years, compared to 56 per cent for technological changes and 49 per cent for changes in customer preferences.
However, the influence of climate change is likely to be higher than the survey suggests since factors interact to drive operational change. Technology and climate change might intersect with a customer preference for lower carbon products, for example, leading to an investment in green technologies designed to reduce the carbon emissions associated with an organisation’s supply chain and create a more climate-conscious product that aligns with sustainability-led customer preferences.
Despite a consensus among CEOs that climate change is a key factor to consider, roughly two thirds of respondents have efforts underway to improve energy efficiency while just 10 per cent have reported delivering on such initiatives. However, fewer than half of respondents have introduced climate risk into financial planning and nearly a third have no plans to do so.
Here are some of the key climate findings from the report:
- 55 per cent have energy efficiency plans in progress.
- 36 per cent have no plans to invest in nature-based climate solutions.
- Just 10 per cent are selling products, services or technologies that support climate resilience.
- Only 5 per cent have implemented initiatives to upskill or reskill their workforce in terms of sustainability and climate factors.
The lack of sustainability upskilling is a particular concern since an actively engaged and educated workforce is integral to delivering net zero ambitions and ensuring organisations implement and adhere to impactful climate strategies.
In terms of the expectations CEOs have for climate priorities, nearly a third anticipate climate change will alter the way they create, deliver and capture value over the next three years, seeing climate change as a distinct industry disruptor and a source of opportunities and risk.
Overall, some organisations are readdressing their financial climate commitments as 41 per cent of CEOs say their organisations have set lower hurdle rates for climate-friendly investments than for other investments. This aligns with PwC’s Global Investor Survey where two-thirds said companies should make expenditures that address ESG issues even if doing so impacts short-term profitability. This has generated a largely positive outcome as CEOs seem to be receptive to this attitude, with four in ten having accepted significantly lower rates of return on climate-friendly investments in the last 12 months.
The report highlights evidence that CEOs are cognizant of climate factors in terms of reinvention and development strategies, with many having taken some sort of sustainable action in the last three years. However, barriers to green technologies and climate friendly product development will still deter organisations from implementing environmentally conscious change regardless of awareness, so perhaps making the transition as easy as possible for is the catalyst for success in this area.