Big businesses now see climate change as the biggest risk they face, according to research out this week.
A global survey of chief executives by professional services firm KPMG now places climate as their major risk factor—the first time this has happened in the half-decade the poll has been taking place.
According to KPMG, 76% of CEOs said their organisation’s growth would “depend on their ability to navigate the shift to a low carbon, clean technology economy”.
It added: “Societal concerns over climate change mean that stakeholders—from customers to regulators—are putting increasing pressure on organisations and their leaders to respond.”
The result could not chime better with events in the world. Thousands of children around the world now strike regularly to protest at what they see as the failure of governments to tackle global warming. Central London and the London Stock Exchange recently saw action by protestors from Extinction Rebellion, the climate campaign group, and there is general speculation that 2019 will be another year of record temperatures around the world.
Climate is even expected to be a topic of discussion (among many) this week during President Trump’s visit to London, because Downing Street and the White House are currently so far apart on policy—even, astonishingly, on whether there is a crisis to be addressed.
Although chief executives would be wise to heed society’s general demand for action on climate, there are forces closer to home calling for action: investors.
At the end of May, State Street, one of the world’s largest asset managers, revealed a new system for judging the environmental, social and governance (ESG) performance of investee companies.
Elsewhere, proxy advisory firm Glass Lewis has been closely tracking how companies report on their climate change disclosures, while there is mounting pressure for businesses to adopt the reporting guidelines from the G20’s Task Force on Climate-Related Financial Disclosures (TCFD). Indeed, last month investors came together at a UN-sponsored meeting in London to discuss their progress in persuading companies to implement the advice.
There are also growing calls for the European Union to update its standards on non-financial reporting to ensure companies disclose more information, while Legal & General, a UK asset manager, recently said in a report that it believed 2018 had been a “turning point” in the attitude of asset managers toward climate-related investment issues.
Investors have their own global warming club, Climate Action 100+, aimed at putting pressure on the world’s largest greenhouse gas emitters to curb their polluting ways.
Other heavy hitters have also thrown their weight behind persuading companies to do better. Central bankers from around the world have been working as part of the Network for Greening the Financial System since 2017. The network has made a series of recommendations, among them the inclusion of sustainability risks in the monitoring work of financial regulators.
All of this adds up to a great deal of focus on the climate crisis, even if a series of reports have insisted reform should be accelerated. The KPMG survey shows that CEOs have now placed the topic firmly at the top of their own priorities. Climate remains a disturbing topic in need of urgent action. But at least the CEOs are getting the message.