CEOs call on governments to provide clarity on climate goals

With COP26 drawing to a close, CEOs have called for bold government action and consistent climate policy. At present, fewer than one-in-five CEOs said that governments and policymakers had given them the clarity needed to meet their sustainability and climate change targets.

Earlier in the autumn, a study from Accenture found that just one-in-20 of Europe’s biggest listed companies is on course to achieve their net-zero pledges, unless they speed up emissions cuts over the next decade. Analysis from the consultancy suggests that almost one-third of those companies have committed to reaching net-zero by 2050 – the latest possible year for the target – and even then, only 9% of those are on course to succeed if they continue the pace of reduction between 2010 and 2019.

Now, a follow-up study from the consultancy has found seen companies call on governments for more consistent climate policies, to help drive them towards net-zero. According to Accenture, business leaders are particularly keen for guidance when it comes to the areas of clear carbon pricing, infrastructure investment and financial commitments to an equitable net-zero transition in the Global South – as the window to meet the 1.5°C target by 2030 has started to close. Though 73% of CEOs said they felt increasing pressure to boost their sustainability efforts, only 18% of CEOs said governments had presently given them adequate clarity for them to hit their climate targets.

European businesses were below this average. Only 14% said they felt governmental organisations had equipped them with the certainty to push for their climate targets, while more than half disagreed. In contrast, Asia was the continent where businesses felt best prepared for sustainability by governments, with roughly one-third of businesses believing what was expected of them was clear. Businesses in Africa and the Middle East also felt more prepared than their European counterparts.

Peter Lacy, Accenture’s Global Sustainability Services Lead, noted, “The Sustainable Development Goals and the Paris Agreement commitments offer the clearest roadmap for how business should lead on climate and the innovation required to solve the world’s greatest challenges. But with only a narrow window of time left to meet these goals, and with the physical effects of climate change being felt sooner than most CEOs expected, leaders must stand up and be held accountable for measurable performance. What we simply don’t have more of now is time. Governments must act, and CEOs are ready to step up. This is not just the right thing to do — there is real business value at stake as well.”

Accenture conducted a study including interviews with more than 100 leading chief executives, along with a survey of over 1,100 CEOs across 113 countries and 21 industries. While a majority of 57% of executives said they were prioritising climate action amid their recovery from the Covid-19 pandemic, many are struggling to accelerate their climate ambitions.

Just under half of CEOs pointed to supply chain interruptions due to extreme weather as a top risk, for example, but only 7% said they are ‘advanced’ in setting up early warning systems to prepare for climate-risk events. Again, Europe was significantly slower at adapting to this than Asian businesses. Only one-quarter of European firms had moved climate-risk prediction systems beyond a ‘basic’ stage, compared to almost 30% of companies in Asia.

Meanwhile, 71% said they were actively working to develop a net-zero emissions target for their company, and 57% believed they were operating in line with the Paris Accord’s 1.5°C goal. But this progress might be overstated by some distance, as of these, only 2% of these companies had a formal target validated by the Science Based Targets initiative.

Speaking ahead of the COP26 conference, Sanda Ojiambo, CEO and Executive Director of the UN Global Compact, noted, “Business as usual is no longer an option. It is clear from the CEOs we surveyed that the business community feels unprepared to deal with our climate emergency. The UN Global Compact has a critical role to play in helping companies develop practical tools and effective best practices to deal with the challenges ahead, while also ensuring they can engage with governments on policy and regulation.”