The moods at the latest United Nations General Assembly and Climate Week in NYC were enthusiastic about innovations helping to address climate risk, and anxious about their urgency. But for myself and many other CEOs, we were determined to talk more about how managing climate risk is a commonsense business strategy focused on materiality, not morality.
In other words, businesses are capitalizing on climate-related work not just because they’re good for the world, but because they’re good for business. And that’s because employees, investors, and customers believe responsible businesses that address climate will grab opportunities to do so, and as a result, will succeed over the long term.
There is a growing demand for businesses to prioritize sustainability and take concrete climate action. A recent study by Potential Energy looks at how consumers and investors view the relationship between ESG, climate action, and business success. It found most consumers say they’re more likely to buy from, work for, and speak well of companies that take climate action, such as reducing carbon pollution or investing in clean energy. And 95% of both Republican and Democrat retail investors believe there should be encouragement, expectation, or requirement for financial services companies to increase the energy efficiency of their businesses.
Climate risks such as water scarcity, trade disruptions, increasingly severe storms, tremendous heat, and more are all impacting the daily operations of businesses. Insurance premiums and overhead costs are soaring, while supply chains are being disturbed. Such as the already fragile medical supply chain facing more stress after the recent Hurricane Helene ravaged a huge Baxter International plant in North Carolina that makes IV fluids for many U.S. hospitals. Proactively managing these risks and cutting carbon emissions safeguards the business, which may be why executive leadership sees the business value.
In an August 2024 CECP Pulse Survey, 71% of respondents reported that ESG is viewed positively by their company’s leadership, indicating a strong endorsement and likely integration of ESG principles into business strategy. This positive perception suggests that most of the companies surveyed see value in aligning with ESG criteria to help with risk management or long-term financial performance. But while it’s highly valued, communicating a company’s long term ESG strategy can be difficult.
While historically, there is an emphasis on companies focusing on quarterly targets rather than long-term goals. Reorienting the capital markets toward the long term can help businesses focus on reducing energy costs, increasing efficiency, strengthening community relationships, creating a cutting-edge place to work/attract top talent, and increasing consumer demand.
And that’s why CECP is holding its 12th CEO Investor Forum in November for CEOs to communicate to institutional investors their growth, strategy, and risk plans, 3-5 years out, around AI and 12 other theme areas including purpose, megatrends, and human capital. This year’s presenters— including AstraZeneca (Nasdaq: AZN), Coca-Cola Company (NYSE: KO), ComEd (Nasdaq: EXC), Tata Consulting Services (NSE: TCS), ExlService Holdings (Nasdaq: EXLS), and Sigma Lithium (Nasdaq: SGML)—will share their Integrated Long-Term Plans (ILTP) and capitalize on CECP’s extensive insights on the why, what, how, and value of sharing an ILTP.
Leaders and executives are focused on tackling climate risk for what it is: commonsense business strategy focused on materiality, not morality. The ability to anticipate and adapt to these significant climate risks is a competitive advantage.