- New survey shows 70% of more than 500 global companies report higher than expected financial returns on climate initiatives benefiting the planet.
- This counters concerns that climate action may harm financial performance, as the survey shows this is stopping a third of businesses from doing more.
- Majority of existing climate commitments are not going far or fast enough to align with Paris Agreement targets, with less than half of companies planning to reduce emissions by 45% plus or setting targets to meet by 2030.
The EY organization on Monday announced the release of the 2022 Sustainable Value Study, a survey of over 500 chief sustainability officers and equivalents representing companies worth more than US$1b around the world.
The survey finds companies taking decisive action to combat climate concerns are benefiting from unexpected financial value in areas like revenue growth and earnings, with 7 in 10 seeing financial benefits that exceed their expectations. Indeed, the results show that those companies taking the most ambitious climate action are also seeing the greatest financial benefits, being 2.4 times more likely to see a significantly higher financial return than they expected.
Those companies taking the boldest steps are also seeing unexpectedly positive benefits in areas like staff retention, recruitment, brand perception and customer purchasing behaviour.
This evidence counters concerns that climate action may harm financial performance. The research shows that these concerns are among the greatest barriers to companies taking further climate action, with 36% concerned it will both negatively impact financial performance and reduce their ability to compete in the market in the short term.
These results should give more confidence to companies who have not yet announced ambitious climate plans that there are financial upsides in doing so. This presents a win-win for business and global sustainability, which is increasingly vital as the action companies are currently taking will not go far or fast enough to meet the planet’s needs when compared to the Paris Agreement targets.
The vast majority (93%) of companies surveyed have made a public commitment on climate change, but just over a third (35%) have a commitment for 2030 and less than half (42%) plan to reduce emissions by 45% or more – with a 45% reduction by 2030 the global target set by the Paris Agreement to keep global temperature increases within 1.5°C and 2°C. Only 11% of responding companies have made a commitment to net zero.
Massimo Bettanin, Partner, Climate Change and Sustainability, EY Romania: “The main finding of last EY survey might sound surprising as climate action is often seen as negatively affecting the business financial performance. To the contrary, there are several sustainability-related drivers which, if well addressed, can led to value creation. A common outcome of a sound sustainability strategy is the cost reduction resulting from energy and resource efficiency, waste minimization and product reformulation, all aspects particularly relevant to those organizations which are energy and/or resource intensive. Equally, understanding and addressing emerging customer demand and expectations, can unlock new market opportunities and increase sales and revenues (or not lose them). A strong sustainability proposition usually helps the business to better understand and anticipate fast evolving regulations, customer preferences and physical risks and then, allocate capital to more promising and long-term profitable opportunities. Therefore, it should be not a surprise that companies that are ahead the curve and fully integrate “sustainability” within their strategy to identify opportunities and mitigate risks have a better choice to financially outperform now, and in the future.”