2023 CxO Sustainability Report: Accelerating the Green Transition
Over the last year, global executives have faced a number of challenges, including economic uncertainty, geopolitical conflict, supply chain disruptions, and talent shortages. Amid these headwinds, CxOs indicate that concern over climate change continues to be a top priority for their organizations, according to Deloitte’s survey of more than 2,000 CxOs across 24 countries.
Climate remains a top priority despite other pressing issues
- When asked to rank the issues most pressing to their organizations, 42% of CxOs rated climate change as a “top three issue” ahead of seven others, including innovation, competition for talent, and supply chain challenges. In fact, only economic outlook ranked slightly higher.
- 75% of CxOs say their organizations have increased their sustainability investments over the past year, nearly 20% of whom say they’ve increased investments significantly.
- Only 3% say they’ve decreased sustainability investments over the past year. The most common reasons for a decrease were concern over an economic downturn and the effects of the Russia-Ukraine conflict.
- Many of them (61%) said climate change will have a high/very high impact on their organization’s strategy and operations over the next three years.
Companies are feeling broad pressure to act across stakeholder groups
- 68% of CxOs said they feel a large-to-moderate degree of pressure from each of the following groups: board members and management, regulators and government, and consumers and clients. Organizations are also feeling pressure from their shareholders and investors (66%), employees (64%), and civil society (64%).
- More than 50% said employee activism on climate matters has led their organizations to increase sustainability actions over the last year—24% of which said it led to a “significant” increase.
- Regulation is also influential: 65% of CxOs said the changing regulatory environment has led their organization to increase climate action over the last year.
- CxOs chose brand recognition and reputation, customer satisfaction, and employee morale and well-being as three of the four top benefits of their companies’ sustainability efforts, suggesting many CxOs see climate actions as a way to strengthen stakeholder relationships.
Leaders are worried about climate change but optimistic about climate action
- 62% said they feel concerned about climate change all or most of the time.
- Almost all respondents indicated their companies were negatively impacted by climate change in some way over the last year. The most frequently-cited impacts are: resource scarcity (46%); changing consumption patterns (45%); and regulation of emissions (43%). Additionally, around a third of CxOs said climate change is negatively affecting their employees’ physical (37%) and mental (32%) health.
- 82% of executives say they’ve been personally impacted by climate events in some way with extreme heat being the most frequently-cited issue.
- Yet 78% are optimistic the world will take sufficient steps to avoid the worst impacts of climate change, and 84% agree/strongly agree the world can achieve global economic growth while also reaching climate change goals.
While organizations are acting, they’re struggling to move the needle
- Leaders are less likely to implement actions that demonstrate they have embedded climate considerations into their cultures and have the senior leader buy-in and influence to effect meaningful transformation.
- For example, 21% of CxOs indicate their organizations have no plans to tie senior leader compensation to environmental sustainability performance, and 30% said they have no plans to lobby government for climate initiatives.
- Additionally, when asked about how serious certain groups are about addressing climate change, only 29% of CxOs said they believe the private sector is “very” serious.
- And only 46% said that ensuring a “just transition” is “extremely important” to their organizations, and the view of its importance differs greatly by region and country.
Deloitte’s report further explores the disconnects between ambition, action, and impact as well recommendations for CxOs to help accelerate progress to a green transition.