Corporate progress on sustainability initiatives, and on actions to address climate change in particular, is stalling amid economic and geopolitical turmoil, as the pace of emissions reductions slows and sustainability spending growth slowing, according to a new survey of Chief Sustainability Officers (CSOs) released by global professional services firm EY.
For its 2023 Sustainable Value Study, EY surveyed 520 CSOs and corporate sustainability leaders at companies with over $1 billion in revenue, across 10 industries and 23 countries in the Americas, Asia-Pacific and EMEIA.
The report indicated a sharp slowdown in climate achievements and commitments, with respondents reporting an average decline in greenhouse gas (GHG) emissions of 20%, down from 30% in a study last year, a decrease in the average number of actions organizations are taking relating to climate change to 4, from a prior average of 10, and an extension of deadlines for achieving corporate climate goals to a median year of 2050, compared to 2036.
The findings align with those of another recent EY survey of senior corporate finance leaders, which found that while sustainability remained as a top investment priority, it was also the most likely area to experience near-term budget cuts in the current inflationary and geopolitically unstable environment in order to meet short-term earnings goals.
Amy Brachio, EY Global Vice Chair of Sustainability, said:
“Amidst the backdrop of unprecedented geopolitical tensions, sustainability leaders are facing clear challenges with resource allocation, but we cannot afford collective efforts to slow when the stakes are so high.”
These results were reflected in the new CSO survey, with only 34% of respondents reporting that their organizations plan to increase spending this year to address climate change, compared to 61% last year.
The report also found a widening gap between those leading and lagging on climate action, with 76% of “pacesetters,” or those assessed as leading across a series of climate-related metrics such as measurement, reporting, operations and supply chain, reporting plans to increase sustainability spend, compared to only 7% of those classified as “observers,” while only a small (6 percentage point) gap separated the two groups in the prior year. The study also identified far fewer “pacesetters,” at 7% this year compared to 32% in the prior year.
The slower pace of climate action found by the study despite indications from the respondents of significant benefits from delivering on their sustainability goals, with more than half reporting experiencing financial value exceeding their expectations from their climate initiatives, and nearly two thirds experiencing better than expected improvements in product and brand value.
Sustainability leaders appeared particularly upbeat about the benefits achieved from their climate initiatives, with 89% of pacesetters reporting capturing higher value than expected in customer value, 79% in employee value, and 79% in financial value.
According to Matt Bell, EY Global Climate Change and Sustainability Services Leader, the results of the survey also indicate a shift in focus from making climate commitments to delivering on them, with the early phases of “low hanging fruit” coming to an end. Bell said:
“CSOs are facing an inflection point. Most have made climate commitments and are now under pressure to meet them. So, it’s unsurprising that focus has moved from public declarations to implementation and delivery. We are entering a period where deep decarbonization gains are linked to large scale, cross sector, investment, data and transformation.”
As sustainability action stalls, sustainability professionals appear to be experiencing job dissatisfaction, according to the report, which found that only 17% of CSOs reported being “highly satisfied” in their roles, and 42% saying that they are not committed to staying with their current employer over the next year. The study assessed that only around one in five of respondents were equipped with the necessary resources and influence to effectively drive sustainability in their organizations. Of these “transformational CSOs,” satisfaction levels appeared much higher, with 78% reporting that they were committed to staying in their current roles.
“Sustainability leaders have to play an increasingly strategic role in navigating both internal and external challenges of moving from climate ambition to climate action. Therefore, it is essential that they are not only empowered to drive sustainability initiatives but also have the operational mandate to integrate their plans into a wider business strategy. This entails that CEOs not only appoint CSOs with a deep understanding of their business models but also strongly endorse collaboration between the CSO and other members of the C-Suite.”
Click here to access the survey results.