Are chief executives on board with the net-zero movement?
A survey of more than 4,500 chief executives has found that only the minority has overseen the creation of a net-zero target for their organisation, while separate research suggests that less than half of the UK's C-suite leaders believe their boss is truly committed to sustainability.
Corporate commitments to sustainability and net-zero emissions have swelled in recent years, with businesses seeking to gain a competitive and reputational edge over others in the sector or attempting to avoid impending legislation around the climate crisis and decarbonisation.
At the start of 2021 alone, it was revealed that more than 20% of the world’s largest corporates, worth sales of more than $14trn, have now committed to net-zero targets.
While the setting of net-zero targets is welcome, concerns have been raised across the green economy that businesses aren’t backing these ambitions with credible action plans. Even on basic efforts to market a business as sustainable, an annual sweep of corporate websites found that four in ten are providing information on environmental criteria that could be considered misleading and potentially breaking consumer laws.
So, just how committed are corporate decision-makers to the net-zero movement? Have chief executives linked their pay to decarbonisation? Do businesses believe they have a role to play? Or are business leaders trying to mislead consumers over sustainability claims to grab a slice of the green revolution?
Two new surveys published on Thursday (20 January) suggest that more work needs to be done to embed net-zero and sustainability at the very top of the business.
First, PwC’s 25th Annual CEO Survey has been published. Accounting for the views of more than 4,500 chief executives across 89 countries, the survey found that UK chief executives are slightly ahead of the global curve when it comes to net-zero.
However, just over one-third (34%) of UK chief executives have made a public net-zero commitment, compared to 22% globally. Additionally, 31% have set a carbon-neutral commitment (compared to 26%). The survey notes there could be some overlap on these targets based on the terminology used by each business.
According to PwC, the biggest drivers behind these targets were to mitigate climate risk – cited by 83% of respondents – attracting and retaining talent (71%) and meeting customer expectations (69%).
Of the UK chief executives without a net-zero or carbon-neutral commitment, 93% don’t believe that their organisation produces a meaningful amount of emissions, while 89% feel they do not have the resources to measure their carbon footprint.
Of those that have set ambitious climate goals, just 19% have linked their personal annual bonus to emissions reductions, but 33% of the largest organisations by revenue are committing to ESG targets in their bonus and incentive plan.
PwC’s global climate leader, Emma Cox, said: “Business leaders are upping the ante on climate action and other ESG activity, and it’s encouraging that many are taking personal responsibility for progress but there’s still a lot more action needed.
“Achieving net-zero by 2050 means big changes for everyone and we’ve seen a real ramp up in commitments in the lead up to COP26. Those who haven’t led on this agenda are now being encouraged by their peers, employees, customers, and investors to respond, resulting in clear opportunities to help organisations understand the impacts of climate and what more they can do.”
The findings echo a YouGov poll of senior decision-makers at more than 1,000 UK businesses, which revealed that less than one-third (29%) have a strategy for reaching net-zero before or in line with the Government’s 2050 target.
Additionally, a survey from Microsoft and Goldsmiths University, which covered 1,707 UK-based business leaders and more than 2,100 of their employees, found that just 41% of organisations represented are credibly prepared to transition to net-zero by or before 2050.
Lack of belief
The fact that UK chief executives are yet to truly embrace net-zero and reflect it in their own pay structure is influencing the confidence of the C-suite.
Separate research from the Russell Reynolds Associates (RRA) found that less than half (48%) of C-suite representatives in the UK believe that their chief executive is “personally committed” to advancing sustainability through that organisation’s products and services.
The study of 8,594 employees and next-generation leaders as well as 907 C-suite leaders across 11 countries, found that just 26% of UK employees are confident that their business has a climate strategy that has been clearly communicated and built towards.
While the Competition and Markets Authority (CMA) has set out recommendations on avoiding greenwashing, 51% of employees still believe that brand management is the driving force of their sustainability efforts compared to just 20% that say that reducing impact or creating value is the driving factor.
Sarah Galloway at RRA commented: “Despite everything that was said and done in the run up to COP26, too many UK chief executives still see sustainability as a marketing issue. No wonder employees have such little faith that their leaders will follow through on the rhetoric.
“The sustainability agenda will demand a fundamentally different style of leadership. There is now an urgent need for leaders who have the vision to strike a new path and the ability to embed purpose and sustainability across business strategy and operations. These leaders are made not born, we have to ensure that the next generation of chief executives are given the opportunity to drive sustainability forward today.”
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