Survey: Over 60% top sustainability execs expect to spend more next year to address climate change compared to this year


The vast majority of corporates pursuing climate action are enjoying better than expected financial returns, according to a major new survey that challenges the misconception that decarbonisation efforts can undermine commercial performance. The latest edition of the Sustainable Value Study from consultancy giant EY is based on a survey of over 500 chief sustainability officers (CSOs) or their equivalents at over 500 businesses globally with market caps in excess of $1bn. The survey found seven in 10 respondents are seeing financial benefits arising from their climate strategies that are exceeding their expectations. Moreover, those companies taking the most ambitious climate action are also seeing the greatest financial benefits, being 2.4 times more likely to see a significantly higher financial return than they expected.

Companies report climate action-related financial and commercial benefits on a number of fronts, including in areas such as staff retention, recruitment, brand perception, and customer purchasing behaviour.

EY said the evidence should serve to counter concerns that climate action can harm financial performance – a misconception that remains relatively widespread. The research also showed that concerns over financial returns are one of the greatest barriers to companies taking further climate action, with 36 per cent concerned decarbonisation efforts will both negatively impact financial performance and reduce their ability to compete in the market in the short term.

The survey also revealed that 93 per cent of the companies surveyed have made a public commitment on climate change, but just over a third have a commitment for 2030 and less than half plan to reduce emissions by 45 per cent or more in line with the goals of the Paris Agreement. Only 11 per cent of responding companies had made a commitment to net zero.

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“While the Paris Agreement is a target for governments, it also sets a standard for the business community to meet,” said Steve Varley, EY global vice chair for sustainability. “Unfortunately, too little action is taking place too slowly to meet that standard.

“However, those companies acting now have lessons to teach the businesses dragging their heels, who may swiftly realise they are missing out on new business opportunities and genuine financial returns. Those taking decisive action are setting out an increasingly obvious ‘roadmap’ which can guide all businesses on how to become more sustainable, deliver on the priorities of their stakeholders and create financial value for their shareholders.”

The CSOs surveyed by the report highlighted a number of common barriers to bolder climate action in their organisation, including a lack of climate change expertise from the board or management; difficulty retaining or upskilling relevant talent; lack of data and technology to reduce emissions; and a difficulty securing financing for climate change initiatives.

In contrast, a majority of respondents said that climate action was now being driven by a host of factors, including a recognition of the need to enhance business resilience, a desire to improve ESG ratings, a response to demands from key stakeholders and the scientific need to act on climate change.

Encouragingly, over 60 per cent of responding companies plan to spend more next year to address climate change compared to this year, with a quarter planning to spend “significantly more”.

“While there are very real practical and cultural barriers to further climate action by businesses, our findings do show a genuine desire to overcome them,” Varley said. “Momentum must now build behind a culture of turning commitments into action, and there are clear business imperatives – and returns – in doing so.”

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The release of the survey comes just a day after a new study from climate risk disclosure platform CDP, which underscored how growing numbers of businesses are taking steps to understand the financial implications of the escalating climate risks they are facing.

The report analysed companies listed on the FTSE 350 and STOXX Europe 600 stock market indices that responded to CDP’s 2021 climate change questionnaire, and found that the firms have identified financial impacts from both acute and chronic climate-related physical risks of $575bn.

“Extreme weather has the potential to punch a multibillion-dollar hole in company balance sheets,” said CDP’s joint global director of capital markets, Claire Elsdon. “CDP’s latest analysis shows some businesses understand this, while others could be denying reality. Progress is also being made on setting targets on the climate transition, but there is little follow through on plans and strategies to get there. There is precious little time for companies to get their act together. The message from this report is clear: there is more work to do, and it needs to start now.”


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