Citing the need to take action on climate issues, 57% of C-suite executives plan to increase their governance of net-zero measures, according to a new survey from Slyvera.
The survey, “Navigating net zero: Turning climate strategy into corporate strategy,” showed that boards of companies in both the US and UK are taking greater control of net zero plans as they manage regulatory risk as well as company reputation.
Part of this pressure is from the UN’s ‘decade of action’ on climate change, which calls for the global community to work on 17 sustainable development goals.
There is also the pressure from the Paris Agreement.
“Nearly a decade on from the Paris Agreement, net zero continues to move up the corporate agenda,” said Allister Furey, CEO, Sylvera. “With this heightened focus on the transition, businesses are increasingly realizing they are insufficiently prepared to implement and measure their plans, lacking the planning and resources to take meaningful action.”
While the net zero transition presents business opportunities, it also creates new risks, with the research finding that nearly all (96%) of the executives surveyed reported that their business had been directly impacted by negative fallout related to its sustainability record in the past.
Just under two-thirds (65%) are concerned about the impact of increasing green regulation on business operations, while a quarter (24%) are very concerned about the brand and reputational damage associated with falling foul of expectations around net zero.
“Regulatory action against greenwashing is firmly on the agenda globally, and in most major economies is either coming soon or already here,"said Ben Rattenbury, vice president Policy, in a statement. "Governments and international organizations are ratcheting up pressure on corporations. As public demand for the transition persists and concern over greenwashing grows, governments are angling towards a more interventionist approach to not only guide businesses, but to reign in companies that have misled investors or obscured their progress. Against this backdrop, the quality and trustworthiness of data is becoming ever more valuable to demonstrate tangible progress.”
Half of the executives (50%) surveyed believe that failing to manage net zero risks will have a high impact on future commercial performance. At the same time, 6 in 10 expect over 10% of annual revenue to be at risk, with some foreseeing more than 30% at risk.
While fear is partly driving these actions, businesses are also identifying opportunities in the net zero transition to strengthen their balance sheets, shift to more resilient business models, and differentiate themselves in competitive markets. Indeed, a majority of respondents (52%) view the business opportunity presented by net zero as significant.
Faced with these pressures, leaders see a clear need to manage these risks at a board level, being well aware of the impact it might have on the overall business, with nearly 3 in 10 (29%) businesses surveyed cited a fall in share price value as a result of negative fallout from net zero pressures.
To address these issues, 9 in 10 companies in the US and UK have increased their investment in net zero initiatives in the last two years – even if at a small scale. One of the areas of spending is the building out of legal and compliance teams in response to growing regulations, with over a quarter (29%) of businesses doing so. Out of those businesses, two-thirds (66%) are actively hiring.
