New research from KPMG indicates that climate change and responsible business practices are being increasingly discussed at the board level in UK businesses, but plans for action to address climate risks are not yet well developed. KPMG questioned over 160 business leaders in the UK, across a range of industries for the survey.
According to the results of the survey, 82% of respondents reported that climate change was being actively discussed at the board level, yet in terms of addressing these risks, only 8% of businesses reported having a fully-fledged plan in place, and 89% reported being in early stage discussions. 3% reported not yet having any plans at all.
According to KPMG, , the COVID-19 pandemic appears to have accelerated consideration of climate change and social responsibility putting pressure on companies and politicians to ‘build back better’ and focus on a green recovery.
KPMG UK’s Head of ESG, Sue Bonney, said:
“Before lockdown, as we counted down towards COP26 in Glasgow, there was growing debate about how to tackle emission reductions and transform the UK into a more sustainable, green economy. Although there were a few weeks pause in the early weeks, rather than becoming a distraction COVID-19 has accelerated the focus on the climate emergency. Talk now on any post-pandemic recovery almost always includes climate change at its heart. But our survey suggests that, while many businesses are taking ESG seriously, there is a long way to go before we can truly say that everyone is placing it at the centre of their future strategic growth plans.
“Throughout lockdown, millions of daily commutes, flights and construction works ground to a halt, visibly transforming the environment around us. But, amazingly, the reduction in emissions for this year will still only be less than 10%, just showing the scale of the challenge still ahead. If we’re to truly achieve the goal of transforming to a sustainable, net-zero economy, we need far greater collaboration and more immediate action at boardroom level.”
KPMG’s research also discovered that business leaders increasingly view the measurement of the risk and opportunities related to climate change as strategic risk issues, though most continue to see current initiatives such as the Task Force on Climate-Related Financial Disclosure (TCFD), as regulatory disclosure exercises. According to KPMG, 76% of business leaders surveyed view the measures as a ‘strategic risk issue’, yet less than a quarter (24%) regarding climate-related financial disclosure as a useful compliance tool or helpful disclosure.
Simon Weaver, Co-Head of Climate Risk and Decarbonisation Strategy at KPMG UK, commented:
“Understanding the impacts on your business from climate change is no longer an ‘added extra’. It’s a core issue which we all, as corporate leaders, must respond to – not just from a wider purpose perspective, but crucially for the resilience of our own organisations. The Coronavirus pandemic was, to some extent, a dress-rehearsal for climate change. It’s exposed the strengths and weaknesses of businesses throughout the UK, and should be the impetus for boardroom discussions on behavioural bias to ignore big, complex problems, the importance of real-life scenario planning, and the value of proper risk planning over simply being reactive.
“This isn’t a subject or theme that can be relegated to a specialist team. We must all, collectively and collaboratively, tackle climate change head on. Clearly, the challenges are different for every sector and every business, but action is needed now. Our survey revealed a lot. It’s clear a lot of businesses are starting to take climate change seriously. But, deliverables and strategies are still part of the future for many. It’s important for the success of the economy and the sustainability of the country that we shift now from narrative to delivery.”
KPMG stated that the results of the UK survey align with findings from its global research efforts, which reveals that ESG is becoming an increasingly crucial focus area for business leaders. The latest KPMG Global CEO Survey found 65% of CEOs are looking to businesses to fill the void in societal challenges and 76% agree that, as leaders, they are personally responsible for change on societal issues.