Survey: Half of large businesses yet to set clear low-carbon transition plans, risking climate goals and worker livelihoods
A survey of chief executives and other board members at more than 1,000 companies has found that, despite acknowledgement of climate risks and the need for reskilling in the low-carbon transition, just half have a detailed plan for reducing emissions and supporting workers.
The survey was conducted earlier this year by KPMG and Eversheds Sutherland, polling 1,095 senior professionals across Europe, the US, Canada, Australia and China on their approach to the net-zero movement. The results have been published today, showing a gap between awareness, ambition and action.
More than nine in ten respondents said their company has a plan to identify and report climate-related risks – a significant year-on-year uptick. This is perhaps to be expected, given that large UK firms will be mandated to disclose climate risk in line with the Task Force on Climate-Related Financial Disclosures’ (TCFD) framework from April 2022, and that all other G7 nations have committed to follow suit.
There was also found to be an uptick in businesses having the in-house expertise and resources to deliver decarbonisation plans (74% for 2021, compared to 47% for 2020), and in the portion of businesses acknowledging that plans will need to be made to upskill or retrain workers (more than 90%). To this latter point, two-thirds of the businesses surveyed indicated that there is likely to be an adverse impact on workers as a result of decarbonisation, without proper plans to support them.
However, turning this awareness and preparedness into ambition and action is a step many firms are yet to take. Only half of the businesses surveyed have a clear decarbonisation plan, backed with measures for changing the business model and moving investments. This cohort includes plans that are – and are not – science-based.
KPMG and Eversheds Sutherland argue that appointing a climate change expert to the board could help companies develop and implement credible climate plans. More than half of the firms surveyed have not yet taken this step.
The report also argues that businesses must engage their workforces now and develop smooth transition plans, lest they risk a high level of resistance to business model changes – and, by extension, an employee base less motivated to support climate solutions. 46% of survey respondents said they anticipate high levels of resistance.
While most businesses are supporting benefits with a sustainability element, such as cycling or electric vehicle (EV) schemes for workers, employee involvement in transition strategy development was found to be lacking, Moreover, while most companies have introduced KPIs tied to performance against environmental objectives, the proportion of companies doing this for the wider workforce is less than one-third.
Sectors covered by the survey are asset management, banking, insurance, real estate, automotive manufacturing, other manufacturing, transport, consumer goods, chemicals, energy, infrastructure, life sciences, media, technology and telecommunications.
KPMG’s global geopolitics lead Sophie Heading said: “The conversation around climate change often focuses on having the right policies, the right investment, the right technologies. These are critical, of course, but what about the human element?
“After all, it is the people within organizations that are expected to play a decisive role in the ability to meet ambitious global targets. Business leaders are beginning to invest in their human capital, to engage employees on the transition to low-carbon business models and make the most of their considerable influence over global workforces to unlock the ideas, innovation, skills and talent that will likely be needed in this race to net-zero.”
Last week, the World Benchmarking Alliance (WBA) published just transition assessments covering 100 oil and gas firms, 50 electric utilities and 30 vehicle manufacturers globally. Of the full cohort of 180 corporates, only nine scored 50% or more in the WBA’s scoring.
Worryingly, less than one-quarter have public commitments on reskilling or upskilling current roles. Planning was weaker still in the fields of supply chain engagement and policy advocacy.