How can slowing climate change accelerate your financial performance?
Investing in talent: an often missed opportunity
At all stages of their climate journey, companies need to think about how to harness the value of employees to support sustainability initiatives. Talent is a key area in this regard: 35% of all companies surveyed say difficulty in retaining or developing talent on climate change is a major internal barrier to doing more on climate change, and 28 % say difficulty in hiring talent with climate change skills is a key external factor. fence.
Yet it does not appear to be a priority investment area. Only 23% of survey respondents cite human resources and talent among their top three climate investments. Additionally, only 27% have undertaken hiring or talent development projects to gain climate change expertise.
This could be a significant opportunity for companies to accelerate transformation from within. As companies seek to embed sustainability across all functions, they will need education, capacity building and knowledge sharing, as well as a tailored strategy to develop the skills they need. For example, AB InBev has begun to develop climate analytics and data science capabilities to support its climate actions, and sees social and behavioral science capabilities as the next frontier: deeper engaging suppliers, consumers and communities on the climate in the future. At the same time, the company continues to build a “team of teams” with training in the fundamentals of climate and sustainability.
The earlier you start, the more you learn
Pioneering companies have learned to apply lessons learned from previous or parallel projects, as well as in different markets. Those who operate globally can take knowledge gained in one place and apply it in others. One of the simple benefits of climate action is accumulating initial experience to build on later.
Big companies are still learning, reviewing their long-term strategies and revising their goals. Successful strategies are rooted in mindsets that prioritize long-term value, flexibility, and a drive to continually improve.
As every business is on an implementation journey, the EY Net Zero Center 2022 report, “Essential, Costly and Scalable: The Outlook for Carbon Credits and Offsets (via ey.com Australia),” found that companies that act now will be more likely to achieve ambitious climate and sustainability goals. As technology evolves, regulations tighten, stakeholder pressure increases and competition intensifies, companies that have already begun to take comprehensive transformation steps will be more resilient and better positioned to take advantage of their climate initiatives.
We’re not there yet
The imperative to act against climate change is urgent. The coming years provide a narrow window during which it is still possible to limit the Earth’s temperature rise to 1.5 degrees Celsius.
Companies have a key role to play in this regard, but they need to think differently about this challenge. They should no longer assume that there is a trade-off between financial value and climate initiatives. Instead, they should see climate initiatives as a way to simultaneously protect and create more value for business, society and the planet.
Sustainability initiatives deliver financial value in multiple ways. Our survey reveals that a clear majority – 69% – of companies are already finding that the financial returns on their investments are exceeding their expectations. They realize equally high levels of value for their customers, employees and society.
Our research also shows that climate action is a journey. As companies take action to address climate change, they are building their own capabilities, which in turn makes it easier to continue making progress.
A key message from these results is: go for it. Businesses that have set goals, implemented initiatives, improved capabilities, and built resilience longer create more value and have less difficulty implementing than those just starting out.
Five steps to take
Looking at the lessons of those leading the charge, as well as recognizing where they and others still need to improve, we see a number of actions companies should take in order to create more value from their climate agenda for their stakeholders and for the planet.
- Challenge your level of ambition – Even for the companies included in this survey that have demonstrated their commitment to change, we don’t see goals ambitious enough to achieve the goals set out in the Paris Agreement.
- Recognize the complexity – Having a real impact on reducing emissions is a complex process and requires measures to track progress and assess the return on investment from the outset.
- Collaborate – Collaborate both within your industry and across industries. This is a collective challenge and working with industry and cross-sector groups will accelerate change.
- Influence your supply chain – Many organizations will have the greatest opportunity to influence emissions reduction through their supply chains by engaging and supporting suppliers.
- Invest in talent – Too many companies recognize that there is not enough sustainability talent available to meet the challenge, but fail to make it a priority. Improving skills in all relevant functions of the organization and attracting specialists can become a source of benefits.
As Cisco CSO Mary de Wysocki said, there’s an “opportunity to help customers understand that making sustainable choices can also have a good return on investment.” The same is true for businesses at all levels. The opportunity to create value for employees, customers and society is tremendous. Companies that use climate action to inform their strategic choices, drive innovation and maximize their financial value will become leaders in the years to come.