“Greed” beats “fear” when it comes to climate action

Here’s this note from Nawar Alsaadi:

This European Investment Bank paper on what drives European companies to invest in green measures offers a fascinating insight into the power of climate opportunity to trigger climate action as opposed to the power of fear in inciting climate action. The paper looked at various corporate triggers for climate action such as perception of climate risk (transition and physical impacts), financially capacity, demand uncertainty, stakeholder pressure, and climate action within their jurisdiction.

The paper found a degree of positive and negative correlation among all these factors and companies’ propensity to invest in green measures, however the finding that I find most interesting is the correlation between perceived positive transition risk impacts and companies’ willingness to invest in green measures. As can be seen from the attached chart, 59% of firms who perceive a positive transition impact have invested in climate measures (green shaded boxes), more than any other category, including companies expecting negative transition impact (51%) or physical climate impacts (43%).

The above confirms my focus on linking sustainability to value creation, because when it comes to business, companies are more inclined to chase an opportunity than mitigate a risk. Those working in corporate sustainability will have more success in achieving their objectives if they sharpen their focus on how their companies can capitalize on the sustainable transition.