“Sustainable business” has become a buzzword in the corporate world, and climate change is a key topic at this year’s gathering of political and business leaders at the World Economic Forum in Davos.
But while chief executives have told CNBC that becoming more sustainable and carbon neutral were immediate goals for their firms, a survey of CEOs released Monday revealed that climate change issues were not even ranked among the top 10 threats to business growth.
The survey by PwC showed that “climate change and environmental damage” were 11th in the rankings that CEOs gave as the biggest threats to their companies’ growth prospects. Their number one worry was overregulation.
Bob Moritz, chair of PwC International, told CNBC Monday that chief executives see climate-related issues as an opportunity, rather than a challenge.
“For this year’s survey, we actually saw … the CEOs saying, ‘It’s an opportunity. It’s an opportunity for differentiation. If, in fact, we can build in climate-related initiatives into our supply chain management, into our customer experience, into the production of our goods and services, that creates opportunity compared to others, because the stakeholders, those that are purchasing, are actually trying to differentiate right now’,” he said.
“Likewise, the other group that’s differentiating is the employees. We see much more employee activism. So if an organization is not focused on climate, it’s less likely they’re going to get the people wanting to join those organizations,” he added.
PwC surveyed 3,501 CEOs in 83 territories in September and October 2019. The sample of 1,581 CEOs used for the global and regional figures in this report are weighted by national GDP to ensure that CEOs’ views are fairly represented across all major regions.
Carmine Di Sibio, chief executive of EY, told CNBC Tuesday that “everything that I’m hearing here from our clients, from CEOs and from my friends … Everything today is around stakeholder capital and climate.”
“I have seen a massive difference in the last six months, in talking to U.S. CEOs, in terms of talking about sustainability and climate. It’s almost remarkable to me, the U.S. has gotten much more on board when it comes to climate and it’s something that they are all focused on. I would say a year ago, the U.S. was not so much ‘bought in’ but obviously Europe was and that continues,” he told CNBC’s “Squawk Box Europe” in Davos, Switzerland.
“So, now there’s a lot of conversations in terms of what a company is going to do to create a circular economy, what are you going to do to reduce your carbon footprint,” he added.
“I really feel the world is on this now and it’s on this in a big way. I think there will be an improvement. We at EY, we’ve committed to being carbon neutral in 2020. We have a lot of people that travel everywhere so we’re going to have to reduce some traveling, but we’re going to have to use (carbon) offsets to get to carbon neutral,” he said.
WEF, Greta and Trump
Climate change and sustainable business will be a key focus for delegates at this year’s WEF summit, but other political risks such as international trade and geopolitical instability will top the agenda as well.
High-profile attendees this year include U.S. President Donald Trump and climate activist Greta Thunberg. Both are expected to take to the stage at WEF on Tuesday; Thunberg spoke on a panel at 7:30 a.m. London time and will give a keynote speech later in the day and Trump will deliver his keynote speech at around 10:30 a.m. London time.
However, the event itself has been criticized for putting climate change at the top of the agenda when environmental activists argue that many delegates arriving on private planes represent some of the worst climate offences.
Jean-Pascal Tricoire, chairman and CEO of Schneider Electric, told CNBC that his company had committed to become carbon neutral by 2025 and to net zero emissions by 2030, and for its total supply chain by 2050.
“That’s not a small project or small ambition because we have 200 factories, we do real products, so it’s rethinking the way we do things,” he told “Squawk Box Europe” in Davos.
During the UN’s Climate Summit in New York last September, scores of major companies committed to achieving net zero emissions no later than 2050 in order to hit a target to limit global temperature rises by 1.5 degrees Celsius by the end of the century — a limit that scientists argue is crucial to mitigate the worst impacts of climate change.
After the summit, the UN said that businesses showed they are willing to take climate action with the world’s largest asset-owners — responsible for directing more than $2 trillion in investments — “committed to move to carbon-neutral investment portfolios by 2050.”
It said that “87 major companies with a combined market capitalization of over $2.3 trillion pledged to reduce emissions and align their businesses with what scientists say is needed to limit the worst impacts of climate change — a 1.5°C future.”
“In addition, 130 banks – one-third of the global banking sector – signed up to align their businesses with the Paris agreement goals,” the UN said.
Schneider Electric’s Tricoire told CNBC that the movement is “really expanding.”
“I think people do it for many, many reasons — the first one is that it makes sense in terms of economics, because somewhere, carbon emissions are a direct reflection of your waste and your inefficiency. So if you can curb them it means you are becoming a more efficient company therefore you make more money,” he said.
“Secondly, if you want to deal with the most advanced customers, if you want to attract the best talent, there’s no way you can do it if you are not going in that direction because the world is becoming unforgiving for that and that’s good, especially with the youth.”