As the COVID-19 pandemic gathered pace earlier this year, I feared that the diversion of the world’s attention to the immediate threat would set back the sustainability agenda by precious, irreplaceable years. But to my joy, and frankly astonishment, the reverse has happened and attention on sustainability is growing, particularly amongst business leaders. It seems that the vulnerability of our society that COVID-19 has revealed has been taken as a sharp reminder that what we take for granted can easily be lost.
That renewed focus by business is not just on climate change, but across the broad spectrum of Environment, Social and Governance (ESG). My colleagues and I at KPMG have witnessed this in countless client conversations since we all started taking to Zoom and Teams. A year ago when we broached the subject of sustainability with the CEO of a company the odds were that we would be politely referred to the Director of Sustainability, if the company had such a post. Now we are being approached every day by CEOs asking for support on their ESG agendas. It is the top boardroom issue.
The evidence for this shift was powerfully reinforced last week with the publication of the KPMG 2020 CEO Outlook: COVID-19 Special Edition. It confirms that business leaders are taking the opportunity to re-evaluate their organization’s sense of purpose, are feeling the need to take a stance on societal issues, and to take action on climate change.
KPMG initially surveyed 1,300 CEOs in January and February, before many key markets were beginning to feel the full impact of the crisis. Then from 6 July - 5 August we conducted a follow-up survey of 315 CEOs to understand how their thinking has evolved. All respondents have annual revenue over US$500M and a third of the companies surveyed have more than US$10B in annual revenue.
As I read the resulting report last week I was struck by how strongly many of the findings resonated with what we are seeking to drive through KPMG IMPACT. In particular it shows that businesses are more purpose-focused than before: 79 percent say they feel a stronger emotional connection to their purpose since the crisis began, and the same percentage say they have had to re-evaluate their purpose.
The change in consciousness was underway before the pandemic. Even in January only 23 percent of CEOs saw their organization’s purpose solely in terms of delivering shareholder value, and 22 percent said their primary objective was to improve society.
The report also shows that CEOs are now more likely to take a public stance on issues of public concern. 76 percent said they had a personal responsibility to be a leader for change on societal issues. For example they are more likely to speak out in support of Black Lives Matter.
And climate risk remains high in CEO consciousness. Nearly two thirds (65 percent) recognize that managing this risk will play a part in whether they keep their jobs over the next 5 years. The realization has finally sunk in that climate risk is something that every company needs to evaluate and manage.
Some may feel all this has come a bit late. But I welcome what I sense is a real deep-rooted authenticity in the focus on sustainability from the individuals who lead some of the world’s biggest corporations. Now we need to see those good intentions translated into action.