Global businesses lack the skillset to deal with US$1 trillion climate problem
Global business lack the skillset with climate problem
Eversheds Sutherland & KPMG International survey reveals knowledge gap and jobs threat owed to climate-related risks.
Global businesses are facing an era of unprecedented disruption and transformation as a direct result of climate change. The financial cost of climate risk, estimated to be upwards of US$1 trillion, poses a significant threat to businesses, and a joint survey of more than 500 director and C-suite executives from the world’s leading companies, conducted by global legal practice Eversheds Sutherland and global professional services organization, KPMG, revealed that company boards and management do not have the skillset to confront climate-related risks.
Seventy-four percent of 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 78 percent of executives think climate risk is a key factor in whether they will retain their job over the next 5 years.
The survey’s key findings feature other significant human and cultural elements to climate risk within organizations:
- One quarter work for companies that offer remuneration incentives for directors to achieve decarbonization targets.
- There is a significant push from below, with 40 percent identifying that employees are leaving roles because they are unhappy about their employer’s climate impact.
- One third indicated that employees have actively expressed dissatisfaction with their employer’s climate impact.
- 14 percent of respondents indicated it is more difficult recruiting young people because of their views on the company’s climate impact.
The report detailing the survey’s findings, Climate change and corporate value: What companies really think was announced on Wednesday, 11 November 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, notes within the report’s foreword:
“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’s 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,” as Michelle T. Davies, International Head of Clean Energy & Sustainability at Eversheds Sutherland, comments. “The survey demonstrates a significant gap: three quarters of executives think climate risk poses a threat to their job while only 26 percent admitted 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. Companies must work with the legal sector to put these plans in place, in doing so they will be transitioning and importantly improving their bottom line.”
“Because of the recognition of climate risk across the corporate landscape, there is now much greater focus on decarbonization, and, consequently, companies need to develop a solutions mentality to develop sustainable business models. This will require upskilling boards, management and staff in areas such as, corporate PPAs (power purchase agreements), energy efficiency and the circular economy,” says Mike Hayes, Global Head of Renewables for KPMG International and Global Head of Climate Change & Decarbonization for KPMG IMPACT. “Also, a whole new financing environment centered on green bonds and other similar products has emerged to provide the necessary liquidity.”
The research in this report was carried out on behalf of Eversheds Sutherland and KPMG International by the independent research agency Explain the Market Ltd. Director 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 has been 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 of KPMG International. KPMG IMPACT brings together professionals and subject matter experts from across KPMG’s global organization to support the delivery of the United Nations Sustainable Development Goals.
KPMG LLP (US)
As a global top 40 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 66 of the FTSE 100, 73 of the Fortune 100 and 119 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.
KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have 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.