Deloitte’s 2024 CxO Sustainability Report: Signs of a shift in business climate action

• 85% of organizations have increased sustainability investments in the past year, up from 75% in 2023
• 70% of executives expect climate change to have a high or very high impact on their company’s strategies and operations over the next three years
• Nearly half of CxOs (45%) say they are transforming their business model to help address climate change and sustainability in a way that is central to their organization’s strategy
• 50% of CxOs have already begun implementing technology solutions to help achieve climate or environmental goals, with another 42% expecting to undertake this work in the next two years
   

Deloitte’s 2024 CxO Sustainability Report: Signs of a shift in business climate action shows that climate change remains a top three issue for global C-suite level business leaders (CxOs), surpassing political uncertainty, competition for talent, and the changing regulatory environment, among others. A key indicator of climate’s staying power on leaders’ agendas is that 85% of CxOs say they have increased investments in sustainability in the past year—up from 75% in 2023—and half have started to implement technology solutions to help achieve climate goals.

Now in its third year, the CxO Sustainability Report, which surveys over 2,100 CxOs from 27 countries, reveals business leaders are simultaneously optimistic and concerned about climate change. While investments, action, and innovation are each trending up, more work needs to be done to help drive concrete progress.

Climate action as an engine for tech implementation and innovation

Leveraging climate technology is critical in the race to decarbonize, and each industry, region, and organization requires their own unique path forward. Considering that CxOs ranked keeping up with the pace of innovation (including generative artificial intelligence [GenAI]) as their most pressing challenge over the next year, leaders have a unique opportunity to prioritize investment in solutions that offer both environmental and business benefits.

In fact, half of CxOs have already begun implementing technological solutions to help achieve climate goals, with another 42% expecting to do so in the next two years. Among those already using technology to bolster their sustainability efforts, more than half say they are doing so to develop more sustainable products and services. Consequently, CxOs say this innovation around their offerings and/or operations is the top expected benefit of sustainability efforts in the next five years (38%).

Leaders see sustainability driving business value

Executives are realizing the business potential in the shift to a low-emissions economy, with an overwhelming majority (92%) believing their company can grow while reducing greenhouse gas emissions. Notably, leaders also reported a shift this year toward seeing more direct environmental and business impact of their sustainability efforts. Supply chain efficiency and/or resilience (37%) and operating margins (37%) broke into the top five benefits of taking climate action this year, just two percentage points behind the top-ranking benefit (addressing climate change) and edging out less-tangible benefits like brand recognition and reputation.

CxOs rank the ability to recruit and retain talent as a top three benefit to improved sustainability over the next five years—aligning with the sentiments of younger talent according to Deloitte’s 2024 Gen Z and Millennial Survey, which revealed over four in 10 Gen Zs and millennials have already changed or plan to change their job or industry due to environmental impact concerns. With the transition to a low-emissions economy already transforming workforces, and with over 800 million jobs vulnerable to climate extremes and economic transition impacts, 49% of executives say they are actively preparing workers for green jobs. More broadly, global leaders reported a growing prioritization of equity and a just transition—which seeks to ensure the substantial benefits of transitioning to a low-carbon economy are shared widely and support those who stand to lose economically—with over half (55%) considering the topics extremely important, up from 46% last year.

Mounting concern not matched by action

More than half of organizations have focused on two to three harder-to-implement, “needle-moving” actions to help drive impact inside and outside their organizations, such as tying senior leaders’ compensation to environmental sustainability performance or developing new climate-friendly products or services. But overall progress is uneven, with 17% of organizations leading the charge by implementing four to five of such actions, whereas over one-quarter of organizations have taken minimal or no “needle-moving” actions. More than half of organizations fall into a “moderate middle” category, implementing two to three needle-moving actions but no more.

However, there are several reasons for optimism on the state of corporate climate action. This “moderate middle” group expects climate change to have a high impact on their strategy and operations over the next three years, with one in five anticipating a very high impact. This group’s current commitments, coupled with their expectation for more in the coming years, suggest they are setting the stage to scale up for even greater impact.

“Executives are beginning to see more tangible benefits from taking climate action for their organizations—pointing to sustainability as a driver of new products, business models, and value creation overall,” says Jennifer Steinmann, Deloitte Global Sustainability Business leader. “The companies in the moderate middle group in our analysis are primed to take advantage of the broader market momentum by building on their existing experience to take additional deeper, transformational actions—such as reconfiguring operations and infrastructure to be more climate resilient or requiring suppliers to meet specific sustainability criteria. Ultimately, this increased action will help accelerate progress toward our collective global climate goals.”

Climate remains a top priority for Chinese executives despite many pressing issues

“Climate change continues to rank among the most pressing issues facing CxOs in China, with close to three-quarters of 125 surveyed Chinese executives reporting an increase in their organization’s sustainability investments, while more than half consider transforming their business models to address climate change and sustainability as an integral part of their strategy,” says Lily Li, Deloitte China Sustainability National Leader. “Compared to their global counterparts, Chinese CxOs appear to be more challenged by a lack of sustainable solutions, highlighting the importance of investing in research and development to innovate and adopting new sustainability products and services through collaboration with ecosystem stakeholders to drive the sustainability agenda forward.”

While addressing climate change is a top benefit for organizations around the world, over 40% of Chinese companies are experiencing benefits when it comes to asset values and revenue from new businesses, in contrast to the global average of 35% for both aspects. Chinese and global organizations are taking similar actions as part of their sustainability efforts, such as increasing insurance coverage against climate-related risks, including monitoring of climate change in corporate governance processes, and reconfiguring their operations.

Recommendations to scale up in high impact areas

As leaders are feeling increasingly concerned about the impacts of unmitigated climate change, they continue to invest to enhance and advance their organization’s sustainability strategy and realize more tangible societal and business benefits. Deloitte’s report highlights key considerations for leaders striving to ramp up action. By building on their key strengths, looking at new channels and new partners to help drive impact, and thinking expansively about the many ways sustainability can create business value, companies can both advance climate action and position themselves to thrive in tomorrow’s net-zero economy.

Methodology
The report is based on a survey of 2,103 C-level executives. The survey, conducted by KS&R Inc. and Deloitte, during May and June 2024, polled respondents from 27 countries: 46% from Europe/Middle East/South Africa; 17% from North America; 9% from Latin America; 28% from Asia-Pacific. Each of the major industry sectors were represented in our sample. Additionally, KS&R and Deloitte conducted select, one-on-one interviews with global industry leaders to glean additional insights.