UK businesses are facing an era of unprecedented disruption and transformation as a direct result of climate change.
The financial cost of climate change risk, estimated to be upwards of US$1 trillion, poses a significant threat to businesses.
A joint survey of 113 UK directors and C-suite executives from the world’s leading companies, conducted by Eversheds Sutherland and KPMG, revealed that company boards and management recognise the need to upskill to confront climate-related risks.
75 percent of UK senior decision makers who responded to the survey in August 2020 agreed their company’s management must improve its skillset to deal with climate-related risks, and that failure to do so could pose a threat to jobs; the survey revealed that 83 percent of UK executives surveyed think climate risk is a key factor in whether they will retain their job over the next five years.
As part of the research, more than 500 business leaders were also surveyed, with 73 percent agreeing management must improve its skillset to deal with climate-related risks.
The survey’s key findings feature other significant human and cultural elements to climate risk within organisations:
Bridget Beals, Co-Head of Climate Risk at KPMG in the UK, said:
"Climate change is a strategic risk issue. The results of our survey demonstrated that business leaders are waking up to that fact, with 65% of executives noting they need to better understand the climate risks their companies face. Whilst there has been big uptake in the number of companies disclosing in line with the TCFD framework in 2020, many are not yet quantifying the risks, which will make it difficult to drive the right strategic decisions at the Board level – it is crucial that this changes over the next 12 months to drive the decarbonisation we need to meet the Paris targets.”
The report detailing the survey’s findings, Climate change and corporate value: What companies really think, was announced at the Green Horizon Summit, a virtual conference held in place of the 2020 United Nations Climate Change Conference, COP26, which is now due to be held in 2021.
Dr. Mark Carney, United Nations Special Envoy for Climate Action Finance and Trustee of the World Economic Forum, and former Governor of the Bank of England, said:
“I would urge company boards to have a robust conversation around the risks and opportunities that climate change poses to their business; seek out this available help; and act early to mitigate climate change risks and turn them into commercial opportunities. Their focus will help break the tragedy of the horizon, creating sustainable business models that society is increasingly demanding and which future generations deserve.”
“Climate risk is a trillion-dollar problem that companies must face up to. It is not only about the physical impacts of climate change but also the transitional risk of failing to decarbonize sustainably and consequentially losing key stakeholders such as investors and customers.”
Michelle T. Davies, International Head of Clean Energy & Sustainability at Eversheds Sutherland, comments:
“The survey demonstrates a significant skills gap: three quarters of executives think climate risk poses a threat to their job while only 26 percent said they have the skillset to deal with the risk. Companies need to upskill their staff and implement strategic plans that begin to mitigate climate risks, which can be reported on. As well as helping companies navigate the myriad of complex regulation, the legal sector can help companies to create and implement these plans, and in doing so help them to transition and importantly improve their bottom line.”
NOTES TO EDITORS:
Bridget Beals, Co-Head of Climate Risk at KPMG UK
The research in this report was carried out on behalf of Eversheds Sutherland and KPMG International Limited by the independent research agency Explain the Market Ltd. Directors and C-Suite executives from 509 of the world’s leading companies were interviewed via an online survey in August 2020. The survey included leaders from four key markets (Asia, Europe, United Kingdom and United States) and nine key industry sectors (automotive; consumer and retail; energy and natural resources; financial services; healthcare and life sciences; infrastructure and real estate; industrial manufacturing; technology, media, and telecommunications; and transport, travel and leisure).
All research was carried out in accordance with MRS and ESOMAR codes of conduct. In addition to the survey, individual in-depth interviews were carried out with nine of the most prominent thought leaders in the areas of climate risk and sustainability.
This research was conducted in part on behalf of KPMG IMPACT, a newly established initiative from KPMG. KPMG IMPACT brings together professionals and subject matter experts from KPMG firms across the global organization to support the delivery of the United Nations Sustainable Development Goals.
About Eversheds Sutherland:
As a global top 10 law practice, Eversheds Sutherland provides legal services to a global client base ranging from small and mid-sized businesses to the largest multinationals, acting for 75 of the Fortune 100, 68 of the FTSE 100 and 113 of the Fortune 200.
With more than 3,000 lawyers, Eversheds Sutherland operates in 68 offices in 32 jurisdictions across Africa, Asia, Europe, the Middle East and the United States. In addition, a network of more than 200 related law firms, including formalized alliances in Latin America, Asia Pacific and Africa, provide support around the globe.
Eversheds Sutherland is a global legal practice and comprises two separate legal entities: Eversheds Sutherland (International) LLP (headquartered in the UK) and Eversheds Sutherland (US) LLP (headquartered in the US), and their respective controlled, managed, affiliated and member firms. The use of the name Eversheds Sutherland is for description purposes only and does not imply that the member firms or their controlled, managed or affiliated entities are in a partnership or are part of a global LLP. For more information, visit eversheds-sutherland.com.
About KPMG in the UK:
KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 17,600 partners and staff. The UK firm recorded a revenue of £2.40 billion in the year ended 30 September 2019.
KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. It operates in 147 countries and territories and has more than 219,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.
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