While business leaders recognize the threat of climate change, a new report finds the pandemic has stalled action.
Despite their concern, almost two-thirds (65%) of organizations need to cut back on their environmental sustainability efforts in response to the pandemic and economic downturn, according to the report from Deloitte.
Business leaders see that climate change is no longer a distant threat, according to the Deloitte Climate Check report, which surveyed 750 executives in January and February. Nearly 30% of executives said their organizations already feel the operational impacts of climate-related disasters, and more than a quarter are facing a scarcity of resources due to climate change, per the report.
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In the midst of these direct impacts, the report said, “the majority of business executives acknowledge that the world is now at a tipping point to act if we are to mitigate the effects of climate change.”
Eighty-two percent of executive respondents said their organizations are concerned or very concerned about the potential to mitigate the worst effects of climate change. Further, 81% agreed or strongly agreed that businesses should make even greater efforts to protect the environment, the report said.
“Despite the gravity of the moment, there is a prevailing sense of hope as 63% agree that with immediate action, we can limit the worst impacts of climate change,” the Deloitte report said. “Only a third of executives believe that we’ve already hit the point of no return, indicating a broader sense of hope that society can combat climate change before it is too late.”
Accelerating efforts are good for all
Organizations are also navigating uncertain territory with shifting political and regulatory environments, operational impacts due to climate-related events, and the growing influence of consumer and employee activism.
Almost a quarter of respondent organizations have seen firsthand how environmental sustainability efforts are good for people, planet and profit. These companies plan to accelerate their environmental sustainability efforts over the next year, including broadening strategies beyond public policy to accountability measures that impact the bottom line and executive compensation, the report said.
Most impactful environmental issues
Climate-related events increasingly disrupting business models and supply networks worldwide were the most cited environmental issues, according to the report.
“As such, resource scarcity/resource cost—due to both environmental and human causes—also remains a leading issue,” which is consistent with last year’s report findings, Deloitte said.
Two forces have emerged as key drivers of environmental sustainability actions: The shifting regulatory and political environment and increasing shareholder and employee activism, the report said.
Actions being taken
The report found that respondent executives looking to make progress on the sustainability front are continuing to emphasize education and empowering others to make environmentally conscious decisions. Executives are also collaborating with other businesses and governments to develop solutions to climate change, the report said.
The top three actions companies are taking focus on public policy initiatives, encouraging suppliers to meet sustainability criteria, and the use of more sustainable materials.
Leading organizations are also exploring more expansive sustainability measures. For example, in 2020, only 19% of executives said their organizations focused on reducing air travel among employees. That percentage jumped to 38% this year as organizations embraced remote working, the report noted.
Companies are also increasingly focusing on senior-level buy-in by continuing to educate leaders about climate issues and tying leaders’ compensation to environmental sustainability goals.
Benefits of environmental sustainability
As a result of their environmental sustainability efforts, respondent companies said their customer satisfaction has improved and executives are seeing a greater measurable impact on the environment, up 8 percentage points from last year’s survey.
“There also have been noticeable improvements in employee recruitment and morale, indicating that environmental sustainability efforts are becoming core tenets of organizational culture and brand identity,” the report said.
Profitability and revenue growth also are among the significant positive outcomes organizations said they are experiencing due to their sustainability efforts. “Almost half of companies have seen improved financial metrics thanks to these initiatives—a key consideration as leaders work to justify and measure the return on investment from climate efforts,” the report said.