The meetings of global leaders surrounding COP26 has elevated the issue of climate change for the public and private sector over the past week. But how are corporate boards and the C-Suite implementing decarbonization plans and what do they think these efforts hold in store for their companies and employees over the short and long term?
To help answer these question, we have released a new report in partnership with Eversheds Sutherland that includes survey data from more than 1,000 C-suite and board-level executives at global corporations across multiple geographies and industries.
Business & Employee Impact - Net Zero strategies should extend to people
Across the board, corporate leaders believe that the decarbonization journey will impact their business models, with 93% claiming it while require significant changes in some facet of their business.
Notably, leaders believe this will have a material impact on their employees, with 34% claiming this will have some adverse impacts on employees but these employees will be retrained and upskilled and 30% believing it will result in job losses.
It is clear from the full survey results that corporate leaders are trying to prepare for the challenges climate change may pose to both business and employees, and are making a real effort to upskill and retrain their workers.
Net Zero strategies should extend to people. Organizations must consider employment effects, the distribution of those effects, and how to mitigate.
The results show clearly that the ESG imperative, while unlocking immense value for long- and short-term sustainable growth, is not free of tradeoffs and corporate leaders will need to work with governments, educational institutions, and others to ensure employees have the training necessary to continue to thrive in the future economy.
Climate Blindspot? How ready are we?
Leaders understand that addressing climate change is a C-suite issue requiring board-level expertise, but the data shows there may be a disconnect between this recognition and actually integrating the skills and knowledge necessary to decarbonize.
Leaders overwhelming believe their companies have the knowledge, resources, and skills to deliver on their decarbonization plans both in the long and short term.
And a surprising 66% of all those surveyed don’t think their company needs any additional skills to develop and deliver on their decarbonization strategy.
However, over half of respondents say their companies have not yet appointed a climate change expert to the board.
Another 38% have charged existing board members to oversee climate risk, potentially placing directors without as deep prior experience in the subject in charge of these efforts. Only 62% of respondents say their board and executive management team understand climate well or very well. That’s down by a quarter from last year’s survey and is perhaps a reflection that executives better appreciate complexity, of translating ambition into action than they have in the past.
Put together, these results suggest that actually carrying out the decarbonization journey may be a blind spot for corporate boards. There is certainly space for boards to improve the structure of their climate risk approach and better embed the expertise needed to implement their commitments.
Corporate ambitions are clear, but there is still much work to do in building a greener economy. The companies that embrace innovation, commit to the necessary upfront investments in skills, resources, and firmwide ESG integration, and remain flexible to meet future challenges will win in the market.