Business models changing in response to climate change

4th September 2015


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  • Management ,
  • Supply chain

Author

Jason Light

Three-quarters of chief executives say their companies are developing new products and services to respond to climate change, and a third report that this is helping them grow their businesses, according to PwC.

Ahead of the UN climate summit in Paris in December, the sustainability and climate change advisory team at PwC polled business leaders from across the world on prospects for growth in a changing climate.

Jon Williams, sustainability and climate change adviser at PwC, said: "Eighty per cent of chief executives told us what motivates them personally on climate change is their desire to protect the interests of future generations. But look beneath this headline and you see a smaller, emerging group of leading CEOs making the connection with growth, costs, risk and shareholder value."

The main climate concerns for CEOs are the potential impacts on energy prices (61%) and the likelihood of more regulation (56%), which Williams describes as "tomorrow's longer term and strategic threats to competitiveness and growth".

Of less concern to CEOs are the longer-term impacts on supply chains (51%) and infrastructure (35%). In terms of a positive outcome from the Paris talks, only 46% of CEOs see a binding agreement on climate change as the main driver for action in their sector.

"Far more need to be motivated by business as well as moral issues, and to make the connection between climate change and financial performance, particularly in the context of an ambitious deal on climate change this year," said William.

Over half the CEOs surveyed said their board discusses climate change and extreme weather risks only when it impacts them. Jonathan Grant, climate policy specialist at PwC, said businesses find it hard to make the link between the global climate negotiations and day-to-day business issues. "National regulation is often more relevant and immediate," he added.

"Chief executives are more focused on the near term and direct issues like regulation and consumer attitudes. Less than half the CEOs see the Paris agreement as a driver for action in their sector, despite its role as a catalyst for national regulation, or make the connection with shareholder value," he said.

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