• Climate action is a key strategic imperative for leaders – a recently released (2023) Deloitte survey of 700 C-suite executives globally confirmed that not only do the overwhelming majority (87 percent) acknowledge that investing in environmentally sustainable practices has long-term economic benefits, nearly 40 percent of organisations will accelerate sustainability efforts in the next year (despite external head winds --- inflation, increase in acute weather events etc). However, while over two thirds have begun to adopt mitigation and adaption strategies and plans, as many leaders highlight greenwashing as a significant issue and some of the most catalytic industries are lagging^[3]. We are seeing organisations increasingly embedding climate and sustainability considerations into core business strategy  but we are only at the start of this transition and much more needs to be done. For Chief People Officers (CPOs), both influencing the strategy and defining the people implications of these new strategic choices is critical.
• The workforces of every organisation will be impacted – No industry or worker in Australia will be untouched by the disruption caused from a changing climate and the global economic response, including impacts from changing weather, on health, industry, policy and infrastructure. However, the extent and type of change for workers will vary by industry and geography. For most, the climate transformation will be a series of incremental changes to their roles, for a few the impact will be significant and rapid both as new and transformed jobs are created and the demand for other roles declines. Deloitte’s economic modelling tells us that 23 percent of the Australian workforce is exposed to emissions intensive sectors^[4] and the jobs most vulnerable to impact are those in electricity supply, agriculture, oil and gas extraction and coal mining. These industries will undergo significant change in order to decarbonise rapidly. Other industries such as insurance, may struggle to operate as usual as they seek to quantify and price climate-related risks for their customers while remaining competitive. As industry-level change occurs, new jobs and skills will be needed across the economy as some workforces are created and others decline. There will be a significant need to reskill, reorganise and redeploy employees for years to come and people functions will be critical in orchestrating this to ensure that organisations maintain their social license, and ability, to operate through a just and inclusive transition of the workforce.
• Your workforce cares about climate - 90 percent of Gen Zs and millennials are trying to reduce their personal impact on the environment^[5] but only 17 percent believe their employers are taking sufficient action on climate change. While they are already doing their part to reduce their personal environmental impact, the majority don’t believe business and government are strongly committed to fighting climate change and want more action. This presents an opportunity for organisations to differentiate in a tight labour market, with unemployment rates at a near 50 year-low^[6]. If employees don’t see their organisations taking meaningful action, they are likely to vote with their feet. We expect this concern to become more acute, as individuals increasingly experience the first-hand effects of extreme heat, wildfires, droughts and floods this number continues to rise.
  

We have a blueprint for economy wide transformation: the digital transformation we have been through and are continuing to go through over the last three decades has touched nearly every organisation and job across every industry. This provides a guide for the type and scale of change we expect to see as a function of climate transformation with similar – or potentially greater – impact over a shorter period. 

The climate transformation will drive change to our workforce for decades. Below are six steps to take today to build positive momentum.

1. Work with your Board and Executive team to ensure a clear vision, strategy and tangible actions to address the opportunities and risks associated with the climate transition 

The minimum requirement is for organisations to have clearly defined net-zero targets and a strategy to achieve those, with scenario planning that assumes the effects of climate change and the actions required to decarbonise. CPOs should work with the Executive and Board to influence this strategy, ensure leaders have the right level of climate awareness to guide through climate transformation, clarify roles and responsibilities, and ensure there is an accountable member (or members) of the executive with a clear climate mandate. Executives and boards need to clearly articulate and demonstrate actions and initiatives that address climate change in the short, medium and long term. 

Questions: 

• In the next 6-12 months how is your organisation tangibly implementing your sustainability strategy, what does success look like and how is it being measured?
• Does the Board and Executive have the required knowledge and skills with regards to climate change to lead?
• Does the climate strategy proactively address the future skills needed in the organisation? 

2. Chart the course for your workforce and then double down on driving adaptability 

Climate change will impact roles and geographies in different ways and over different time scales. The foundational step is to understand the workforce today in terms of the work being performed, the current capabilities in the workforce (both on and off-balance sheet) and the location of the workforce. This provides the basis to understand the impact of the climate agenda on the workforce, and vice versa, in order to develop a clear workforce strategy. This needs to consider the different types of impacts on different types of jobs: emissions-intensive jobs, growing-demand jobs, transformed jobs, climate-reliant jobs and new net-zero jobs^[7]. A key tenet of the workforce strategy should be driving flexibility in the workforce. This includes redesigning jobs to be more cross-functional, upskilling employees in anticipation of changes, considering flexible workforce composition (including use of contingent workers) and diversifying the location of work. Having an approach to support individuals to mobilise around new opportunities and challenges quickly will be critical.

Questions:

• Do you understand the capabilities of the current workforce today and how these need to change over time to deliver the organisation’s climate strategy?
• Do you have an approach to regularly identify emerging climate related risks and opportunities, and assess what they mean for your workforce?
• Does the workforce have the adaptability to quickly mobilise around new challenges as they arise? 

3. Build the climate, sustainability and leadership skills needed 

We know that in many areas across Australia right now there are skills shortages, and climate skills are no exception. The demand for green skills (those that enable the environmental sustainability of economic activities) is already outstripping demand in Australia - green job postings have grown by 8 percent for the past five years; however, the share of green talent has only grown by 6 percent^[8]. The top job growth sectors are construction, corporate services, energy and mining, public administration and manufacturing^[9]. It is unlikely that migration and education will fill these gaps in totality - organisations will also need to build the capability they need from within. In doing so, CPOs must consider those who require upskilling in new capabilities, those that need to deepen capabilities they already have, and those that need to be moved out of roles in decline and to reskill into new high growth roles. Critically, leaders will need enhanced skills to lead through the change at a faster pace, drive innovation and adaptability in the workforce, and lead across ecosystems (as decarbonisation requires organisations to partner across their industry with competitors, suppliers and customers). Organisations that respond first will have the opportunity to set the standard for their industry and create competitive advantage through shaping their future workforce.

Questions:

• Where will you source or build the skills you need in the workforce (including both internal and external channels)?
• How is climate incorporated to your broader leadership and learning programs as a core capability?
• How can the organisation work with others to build critical skills in key areas? 

4. Ensure resilience in the workforce and workplace to manage extreme weather

There is still much that is not known about exactly how the transition to a low carbon economy will play out for Australia. We do know Australia is expected to experience an increase in high temperatures and droughts in southern areas^[10]. This will pose challenges for disaster risk management, water and food security, ecosystems, forestry, buildings, transport, energy, human health, tourism and national security. CPOs need to start by considering the climate resilience of workforce locations and operations and plan for more regular extreme events, including fires and floods. Organisations need to be configured with the capacity and capability to sense, respond and anticipate changes in their external environment – including technology, regulation, consumer preferences and science. Important foundations include establishing business continuity plans, processes and supports for operations and employees who may be impacted by extreme weather into the future.

Questions:

• Do you have business continuity plans in place for your most exposed workplaces?
• Have you undertaken scenario planning to prepare your organisation’s response to extreme weather?
• How has your organisation managed employees who have been affected by extreme weather events and to what extent are these strategies sustainable for the organisation as a whole? 

5. Start redesigning work for a net zero world that is sustainable and inclusive

As business strategy changes, the work done across the organisation will also need to change. This presents an opportunity not just to change work but to improve it. Improving it could look different for every organisation. We are presented with an opportunity to fundamentally redesign work and augment roles with technology to make employees less vulnerable to the impacts of climate change. Some organisations are starting to use drones and wearable devices to track the exposure of workers to weather, air quality, noise and pollutants in real-time. Others are seeking solutions to automate such high exposure work, through robotics or advanced satellite and monitoring technology.

In addition to making work less emissions intensive, there is an opportunity to make work more sustainable and inclusive – with a particular focus on ensuring the impacts of climate change do not disproportionately impact the social and economically marginalised. There is an opportunity to ensure that realising net zero ambitions is not at the expensive of decent work and social justice. In designing organisational strategies, principles of diversity and inclusion should be at the forefront in decision making^[11]. This includes redesigning work to be meaningful and interesting for people, providing the appropriate supports in terms of tools and technologies and ensuring transparent dialogue with the workforce.

Questions:

• What elements of work offer the greatest opportunity to shape a better future?
• What opportunities exist to augment high exposure work with technology?
• Does your climate strategy include a focus on a just and equitable transition?

6. Align measures and rewards to drive climate action

The old adage, ‘what gets measured gets done’ certainly holds true as organisations seek to act on climate. People functions can enable the alignment between reward, incentives and action on climate. CPOs can start by considering how to incorporate climate action into the annual performance cycle and the reward and incentive processes that flows from this, across goal-setting, review and ratings – with a focus on nudging employees at all levels to consider how they can contribute to the organisation’s overarching climate ambition. 

It’s also time to think differently about how rewards frameworks, tools and strategies can incorporate elements of ’green’ reward and recognition to supplement talent attraction and retention strategies. Australian employers are investing considerably in total rewards and employee benefits – including salary packaging vehicles, free meals, discounts on financial products, additional paid leave and equity. There is an opportunity for organisations to review these and ensure they are aligned to their climate aspiration. For example, it may be possible to offer employees ‘ethical’ or ‘green’ superannuation funds that make it easier for employees to align their finances with their values. Additionally, some organisations are beginning to offer discounts to employees who move their home energy provider to renewables, interest-free loans on energy efficiency upgrade projects, salary packaging that includes electric vehicles and bikes, as well as providing climate emergency leave for employees affected by climate induced disasters.

Questions:

• How is action on climate measured and rewarded in your performance framework?
• How ‘green’ is your current rewards offering? 
• What behaviours do your organisation’s performance metrics and reward strategies encourage?
  

The rapid decarbonisation required in Australia won’t happen without a suitably skilled and motivated workforce, with the right leadership and vision in place. We know that CPOs are facing into a large number of workforce transformation opportunities spanning digital HR, employee experience, hybrid work and wellbeing. However, the most successful responses to the climate challenge will be people-led. Chief People Officers have an opportunity to take an active leadership role and accelerate their organisation’s climate strategy by placing the workforce at the centre. The six steps and questions posed in this article provide a starting point to reflect on where you are already leading, and where opportunities exist to bring a climate lens to your workforce priorities.