What Is One of the Biggest Risks Facing Business?

Survey says: climate change

CEOs are aware of the biggest risks facing their businesses and know the time is coming to course correct to remain viable. As a result, many are planning, undertaking, or completing actions to prepare their business to address one of the biggest risks and opportunities, climate change.

These were the findings of a recent PwC survey completed with more than 4,700 CEOs across 105 countries. The methodology includes figures weighted proportionally to country nominal GDP and included companies with revenue less than $100 million all the way more than $25 billion.

In the PwC Survey, CEOs recognized the need for pivoting, with 45 percent believing their company won’t be viable in ten years on its current path. CEOs know that creating a long-term outlook starts with some reinvention of how a business handles risks like technology and climate change, with 97 percent already engaging in some efforts to change how they create, deliver and capture value.

Climate action and inaction

Climate change is one of the fastest growing factors affecting businesses, with more CEOs willing to accept and address the need for more sustainability. In the survey, 40 percent of CEOs are willing to accept lower rates of return for climate-friendly investments, accepting the tradeoff of more resources to boost sustainability efforts and company viability in their organizations.

External investments aren’t the only way to address climate change. Investing in employees to reskill or upskill in areas like climate action is also an option, with 39 percent of CEOs reporting efforts are underway and another 23 percent planning to invest in employees in the areas of pressings needs that CEOs have identified, like climate action and artificial intelligence.

While there is a growing interest among the C-suite to factor climate risks within business, it is still all too common to find CEOs not doing enough to address the issues. Over half of the respondents have not incorporated climate risk into financial planning and nearly a third do not intend to do so. With so few addressing the financial implications of climate change, it shows that CEOs are still narrowly focused on their own business, and not addressing the downstream and upstream issues within their supply chain.

PwC estimates that $58 trillion (55% of global GDP) is moderately or highly dependent on nature, and yet, 36 percent of CEOs don’t intend to invest in nature-based climate solutions. With natural resources and ecosystems on the decline, businesses need to do more to be a net-positive for society beyond simply mitigating its own risks. There is plenty of room for growth for company executives to take the necessary steps to invest in climate solutions.

What can a business do?

1. Incorporate climate risks into financial planning. Partnering with the CFO is a good place to start. With SEC laws requiring carbon emissions reporting and more fiduciary responsibility on resource spending, being aligned with the CFO helps to stay ahead of regulatory standards.

2. Invest in your people. There’s enough evidence to show that it is more affordable and creates more loyalty to upskill and reskill your current workforce rather than hiring for changing roles. When it comes to newer areas of focus, like carbon emissions reporting and climate action for business, the population of trained professionals is low. Investing in employees to get a certificate in climate action for business is a great first step in recognizing the commitment to sustainability.