Surveys of CEOs differ as to how they feel about climate

– PwC’s annual CEO survey reveals that some CEOs still don’t list climate risk anywhere near the top of the list of things to be concerned about today.
– But a Deloitte poll of European CEOs found that 70% were concerned about climate (but that also means that 30% were not).
– And a newer KPMG survey shows that CEOs are ramping up ESG investments as climate grows as a risk

Here’s the intro from this “ESG Today” piece about a CEO survey that got a lot of press a few months back:

PwC released results from its 24th Annual Global CEO Survey, revealing that many CEOs do not yet perceive climate change as a major threat to their businesses, and are also not incorporating climate risk into their strategic risk management activities.

PwC polled over 5,000 CEOs in 100 countries and territories over January and February 2021, from companies ranging in size from under $100 million in revenues to over $25 billion, covering a broad range of topics.

On the topic of factors that could potentially threaten their companies’ growth prospects, climate change barely cracked the top ten, with the top spots going to pandemics and health crises, cyber threats, and over-regulation. Overall, only 30% of CEOs listed climate change as a potential threat, marking a modest increase compared to 24% in the 2020 survey, and 27% of CEOs reported being ‘not concerned at all’ or ‘not very concerned’ about climate change.

The report also indicated a lack of action by CEOs on addressing climate risks, with 60% of CEOs reporting not yet factoring climate change into their strategic risk management activities. PwC noted a moderately negative correlation between exposure to natural hazards and companies’ preparedness for climate-related risk, with companies in countries with the most exposure being less likely to have embedded climate change into their overall risk management approach.

While CEOs in the survey appeared to downplay the risks from climate change, the need to measure and report on environmental sustainability issues does appear to be gaining traction. 39% of CEOs responded that their organisations need to do more to measure their environmental impact, and 43% believe their organisation needs to do more to report on it, a greater share than any other disclosure area.

In this note, Zsolt Lengyel writes:

PwC‘s annual CEO survey has a few surprises re. climate (in)action and risk-management as if CEOs live on another planet.

“Far more surprising than the rocket-like rise of pandemics on the threat lists of CEOs was the modest rise of climate change as a priority. Last year, 24% of CEOs selected climate change as an extreme concern; this year, it was selected by 30%. This may seem like a notable jump, but in the context of rising anxiety about nearly all threats, it represents just a marginal increase.

What’s more, another 27% of CEOs report being ‘not concerned at all’ or ‘not very concerned’ about climate change. And 60% of CEOs have not yet factored climate change into their strategic risk management activities. In fact, at a country level, our results show a moderately negative correlation between exposure to natural hazards and companies’ preparedness for climate-related risk. Companies in the countries with the most exposure—which are generally among the largest contributors to CO2 emissions—are less likely to have embedded climate change into their overall risk management approach.”

The comments on this LinkedIn note include the themes of:

• This is shocking.
• Maybe the time horizon is a factor, meaning that CEOs are mistakenly only focused on the short-term.
• Is this an agent/manager-owner problem? What long-term owners what/need is not always what CEOs want/desire?
• Risk managers were often separated from management and not regarded as an essential part of implementing the company’s strategy.
• I guess that explains the $1.3 trillion expected company losses by 2026 due to climate change. I´m starting to think we should sue them for negligence. There´s no excuse for this level of ignorance/complacency.
• CEOs mastered creating value for the company and shareholders. It’s difficult to reset on purpose, with different values at stake.

But maybe we should take that survey with a grain of salt? After all, this piece from Deloitte is entitled “Climate Risks Send ESG to Top of CFO Agenda”…

And here is a note from Mike Barry about the PwC CEO survey over in the UK:

Latest PwC CEO Survey is a good microcosm of current business thinking on the climate crisis. For UK CEOs:
1. 70% very/somewhat concerned (but 30% not!)
2. 60% plan to invest more into ESG
3. 50% recognise the need for better reporting
4. 50% believe its a top 3 issue for Gov + Biz
5. But only 45% are confident that Gov will balance short term post Pandemic recovery with longer term sustainability needs
6. And just 43% are integrating all of the above into strategic risk (and opportunity) management

Yet the science, citizen concern and low carbon marketplace disruption is accelerating faster than their response….

And then you have this new KPMG study finding that many CEOs are looking to ramp up ESG investments as climate grows as a “growth” risk…