Outside of Covid-19, climate remains the biggest agenda issue for society. And yet doubts are emerging over the readiness of big business to tackle global warming.

Fresh research published this week by KPMG shows that few boards are putting in the planning required to deal with climate change. This may not come as a surprise to regular readers. When Board Agenda conducted its own research into risk preparedness, alongside Mazars and INSEAD, climate came at the end of a long list of priorities.

Both sets of research raise serious questions about the approach of corporates to climate change. KPMG’s survey of 160 UK business leaders found only 8% could say they had a “fully-fledged” plan in place to confront climate change risk. At total of 3% say they have nothing at all, while 89% say they are in “early stage discussion”. At least 82% say the issue is being “actively discussed”.

When Board Agenda questioned business chiefs at the beginning of the year climate change was placed last on a list of nine risk priorities behind issues such as compliance and regulation, financial, reputational, cyber risk, conduct, digital and business disruption, geopolitical issues, supply chains and outsourcing.

KPMG is convinced companies have elevated the importance of ESG issues, with the pandemic accelerating the change in focus. However, the survey suggests climate is not a top priority.

According to Sue Bonney, KPMG’s head of ESG: “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.”

Bonney says that places the spotlight on boards. “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,” she says.

Climate risk knowledge

If there is an explanation why climate is not heading boardroom priorities it may be that there are plenty of distractions and a lack of appropriate knowledge. The Board Agenda survey found almost three-quarters of those polled believe they work in an environment in which they confront more risks than five years ago.

Most also say they are “sufficiently skilled” to address all the risks they face. However, when asked about knowledge of specific areas the picture changes. While 91% of respondents say their boards have the right financial knowledge, only 34% could say they had a grip on climate.

There are other issues. According to a Harvard Business Review paper, chief executives feel a “tension” between short-term profit and long-term value.

And a recent study from the European Commission concluded that far too many company directors in the EU continue to think short term instead of acting in the long-term interests of their stakeholders. The commission’s anxiety is that short-termism does not fit with a contribution to the UN’s Sustainable Development Goals nor the Paris Agreement on climate change.

That said, a report from Accenture and the UN Global Compact last year found that 99% of chief executives agree “sustainability issues are important to the future success of their businesses”.

Businesses are obviously changing. And boards have been feeling the heat from regulators, politicians, the public and investors. The only question is how fast they can turn good intentions into effective policies. The pressure to accelerate is only likely to increase.