Is there any conflict between the climate goal of a company and its growth? What do the CXOs think about this?
A survey carried out by Big Four consulting firm Deloitte in 2023 shows that CXOs believe that both their organizations and the global economy can continue to grow while reaching climate goals and reducing greenhouse gas emissions. The report is based on a survey of 2,016 C-level executives across 24 countries.
A total of 65% of CXOs said the changing regulatory environment had led their organizations to increase climate action over the last year. Nevertheless, nearly a quarter of CXOs said the difficulty of measuring their organizations’ environmental impact was a top barrier and nearly one-fifth cited cost and focused on near-term issues as barriers.
Deloitte has recommended a set of actions to 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. To get started organizations can:
- Embed climate goals into the business’ overall strategy and purpose: Often, what impedes action isn’t lack of intention; it’s the choices and tensions that CXOs and boards must navigate to clearly define their organizations’ stance on climate action. By developing a holistic view of their sustainability goals and then integrating that view into their enterprise purpose and strategy, CXOs can reduce or eliminate stakeholder dissonance—and help ensure leaders focus on strategically-aligned climate action.
- Build trust by taking credible climate actions: Our survey uncovered scepticism about the private sector and government commitments to address climate change. Organizations can fight against such distrust by ensuring the data they report is relevant and reliable. Third parties like The Science Based Targets initiative and CDP offer guidance and widely recognized frameworks to set and measure credible climate action. Additionally, organizations should support policy interventions and enforcement mechanisms to eliminate greenwashing and fraud.
- Empower the board: As stewards of their organizations, boards can play a vital role in guiding businesses toward a more sustainable future by ensuring that long-term views are captured in management decision-making. However, boards must know the right questions to ask and where to push to find robust solutions.
In association with the World Economic Forum and Climate Governance Initiative, Deloitte has prepared guides with key insights from chairs leading climate action. These guides consider how key stakeholder groups are responding to a climate-driven future, help chairs understand the decarbonization roadmap, and how to realize value through a “just transition.” The firm recommends the following action:
Encourage stakeholder action: Organizations can’t drive change solely on their own; part of leading is enabling and influencing their stakeholders to act. For example, business leaders can collaborate with local and national governments in support of climate initiatives (something only 32% are currently doing, according to the survey) and work with their suppliers and business partners to meet specific sustainability criteria (something only 44% are doing). Leaders should also harness their employees’ passion by offering climate training and involving them in their organization’s sustainability work.
Consider the long-term opportunity: Nineteen per cent of those surveyed cited the cost of climate initiatives as a barrier to increased action; yet, research from Deloitte has found that climate inaction could cost the global economy US$178 trillion over the next 50 years. On the other hand, it could gain US$43 trillion over the same period by rapidly accelerating the transition to net zero. Although investing in the necessary change today may cause temporary financial discomfort, effective investments will pay off in the long run, especially as demand for sustainable products and services increases.
Invest in today’s (and tomorrow’s) technologies: Climate technology, whether it’s electrification, sustainable aviation fuel, or carbon capture—plays a vital role. But understanding which technologies to invest in, how to find them, and how to deploy them effectively can be daunting, especially when each industry, geography, and organization requires its own path forward. GreenSpace Tech by Deloitte is uniquely positioned to tackle this challenge by helping businesses scan, assess, and connect to innovators and emerging and existing climate tech globally and formulate effective strategies to apply those cutting-edge solutions.
Collaborate to drive systems-level change: The pace of transformation needed requires a coordinated approach between sectors and industries and throughout supply chains and regions. One company can only do so much when the necessary infrastructure (e.g., electric charging stations, renewable energy) is in low or uneven supply. System-wide engagement with industry peers committing to accountability can help drive rapid behavioural change. Government, business, and society must work together to achieve their shared sustainability objectives.
Also Read: The rising significance of sustainability in business
