Companies recognize the need to adapt to new requirements and are even pressured for these changes by the government, boards of directors, clients, and civil society.
Climate change affects our lives in various ways, whether in how we commute, the choice of the food we eat, or even when deciding on the products and services we adopt in our daily lives. It’s no wonder that many businesses are already aware of the current and future transformations that will require adjustments.
Nearly all companies – 97% – claim to already feel the impact of climate change on their operations, according to a survey conducted by Deloitte with executives worldwide. They cite the following five main reasons for this claim:
- 48% mention operational impacts due to natural disasters.
- 47% cite regulatory and policy uncertainties that impact compliance.
- 42% point out pressure from civil society for adaptations.
- 40% claim they have to modify their industrial processes.
- 40% say that mitigating climate change carries a cost for the business.
There is a perception that carbon neutrality is becoming a requirement for all types of businesses. Of course, some sectors are more aggressive towards the environment, requiring more emphasis, investing in carbon seals, or voluntarily participating in the carbon market.
Pressure for Change
As demonstrated in this article, investments related to ESG – environmental, social, and governance – are projected to reach $50 trillion by 2025, representing over one-third of managed assets worldwide.
To access these resources, many organizations will adapt to various aspects of their businesses, aiming to avoid reputation issues and effectively act against climate change.
According to executives surveyed by Deloitte, pressure for operational adjustments comes from various fronts. The five most mentioned are:
- 77% indicate the government or regulatory agencies.
- 75% mention both boards of directors and clients.
- 72% cite organized civil society, such as NGOs, the press, and activists.
- 71% point out it as a requirement from investors themselves.
- Other mentioned parties include competitors or peers (66%), employees (65%), and banks or resource-providing companies (55%).
What are they doing in practice against climate change?
Executives acknowledge the need for adjustments within their organizations to combat climate change and feel pressured in that direction. But what changes are happening within companies? The most common initiatives include:
- 67% mention the adoption of sustainable materials based on recycling, low carbon emissions, and the use of renewable energy.
- 66% are seeking ways to increase energy efficiency by investing in more efficient plants and generating their energy through solar and wind power.
- 57% have allocated resources to equipment with lower energy consumption and less environmental impact.
- Another 57% claim to invest in training and capacity-building for their employees.
- 55% have reduced air travel volume after the pandemic.
However, companies state that there are several complex issues to address. In this regard, the development of new environmentally friendly products or services is the most cited (49%), followed by developing suppliers with sustainable standards (46%) and updating or changing facilities due to climate change (44%).
What are the benefits of this investment?
Investing in this sector also brings benefits to the company. The most mentioned benefits include:
- Brand recognition and reputation improvement (49% of mentions).
- Meeting customer expectations (46%).
- Tackling climate change (43%).
- Boosting employee morale (42%).
- Innovation resulting from operations (39%).
To achieve these results, companies face various obstacles, such as the difficulty of measuring their environmental impact, as mentioned by 30% of executives (carbon calculators can help determine carbon emissions). Two other reasons tie in at 27%: the lack of a supportive supply chain for these activities and the cost of these investments.
Although resources are available, there is a business interest and even societal pressure, transformations needed to address climate change still depend on the emergence of products and services aligned with this need. That requires time for the entire production chain to organize itself.
