What is stopping your business from taking action?
There are a variety of reasons that businesses are failing to take decisive action on setting carbon emissions reduction targets. In October 2020, KMPG and Eversheds Sutherland surveyed more than 500 global companies, and their resulting research paper Climate Change and Corporate Value outlined the key issues that corporations determined to be the biggest obstacles to decarbonisation. The top three business challenges were:
- Short term costs – When it came to costs, the majority of executives surveyed (76%) stated that the costs of decarbonisation were unaffordable – that the amount of investment required to successfully reach net zero would impact short term profitability
- Technology – Almost half (49%) of respondents believe that “the necessary technology does not exist to enable us to decarbonise” – which suggests that they believe their total supply chain emissions (scope 1, 2 and 3) cannot be reduced and offset to zero
- Internal skills shortage – Nearly the same number of executives (47%) agreed that “we don’t have the right skills within the organisation” – pointing to a lack of internal resources, skills and experts to be able to successfully develop the strategic plan and manage this organisational transformation
The research also stated that of the companies surveyed, only 45% were currently publicly reporting on the risks they are facing, and also highlighted a lack of incentives and absence of decarbonisation targets for senior leadership and corporate executives.
The solutions – how to get started
As pressure on businesses increases – from government regulation, consumer preferences, employees, investors – action will be unavoidable. Businesses need to prepare themselves for the changes they will need to make in order to transform and thrive in a net zero economy. The journey is non-linear, and progress will likely feel slow as you go through the cyclical process of:
1. Identifying risks and opportunities
2. Developing a strategic approach
3. Taking action to transform
4. Measuring and reporting on progress
However, with one of the key barriers to action outlined above being a lack of internal skills, one of the biggest opportunities is for employees themselves to act as a resource to fuel this transformation; to leverage their professional skills and thoroughly investigate and interrogate their corporation’s exposure to climate risk, and to help map out a transformation from within. For global decarbonisation to succeed at the scale needed, it will take proactive individuals within multiple departments of businesses, scoping and implementing transformation roadmaps.
- Mounting climate related risks will force businesses to decarbonise sooner or later.
- Three types of climate related risk: physical, transition, reputation.
- Businesses feel underprepared to mitigate these risks, and employees have an opportunity to build a vision and address these risks before they become acute.