Business leaders across the UK and US are preparing to take greater control of net zero plans within their companies, according to a new report from carbon data platform Sylvera. As the need for climate action grows, and with it the need to meet net zero targets while managing growing reputational and regulatory risk, a majority (57%) of C suite executives plan to increase their governance of net zero measures.
The findings are featured in a new report, ‘Navigating net zero: Turning climate strategy into corporate strategy’, published by Sylvera. It sheds light on how business leaders in these two major economies are responding as stakeholder pressure builds for net zero.
As we approach the midpoint of the 2020s – the UN’s ‘decade of action’ on climate change – the urgency to demonstrate tangible progress in reducing emissions and achieving net zero is intensifying. While the net zero transition presents huge business opportunities, it also creates new risks, with the research finding that nearly all (96%) of the executives surveyed reported that their business had been directly impacted by negative fallout related to its sustainability record in the past.
As a result, business leaders are increasingly worried about the heightened risk landscape that the net zero transition presents. Just under two-thirds (65%) are concerned about the impact of increasing green regulation on business operations, while a quarter (24%) are very concerned about the brand and reputational damage associated with falling foul of expectations around net zero.
Half of the executives (50%) surveyed believe that failing to manage net zero risks will have a high impact on future commercial performance. At the same time, six in 10 expect over 10% of annual revenue to be at risk, with some foreseeing more than 30% at risk.
While fear is partly driving these actions, businesses are also identifying opportunities in the net zero transition to strengthen their balance sheets, shift to more resilient business models, and differentiate themselves in competitive markets. Indeed, a majority of respondents (52%) view the business opportunity presented by net zero as significant.
Faced with these pressures, leaders see a clear need to manage these risks at a board level, being well aware of the impact it might have on the overall business, with nearly three in 10 (29%) businesses surveyed cited a fall in share price value as a result of negative fallout from net zero pressures.
Allister Furey, CEO and co-founder at Sylvera, said: ‘Nearly a decade on from the Paris Agreement, net zero continues to move up the corporate agenda. With this heightened focus on the transition, businesses are increasingly realising they are insufficiently prepared to implement and measure their plans, lacking the planning and resources to take meaningful action.’
Despite these fears, nine in 10 companies in the UK and US have increased their investment in net zero initiatives in the last two years – even if at a small scale.
One of the most likely areas of spending is the building out of legal and compliance teams in response to growing regulations, with over a quarter (29%) of businesses doing so. Out of those businesses, two-thirds (66%) are actively hiring.
Ben Rattenbury, vice president of policy, said: ‘Regulatory action against greenwashing is firmly on the agenda globally, and in most major economies is either coming soon or already here. Governments and international organisations are ratcheting up pressure on corporations.
‘As public demand for the transition persists and concern over greenwashing grows, governments are angling towards a more interventionist approach to not only guide businesses, but to reign in companies that have misled investors or obscured their progress. Against this backdrop, the quality and trustworthiness of data is becoming ever more valuable to demonstrate tangible progress.’
With senior leaders facing mounting pressures from different stakeholder groups and implementing net zero strategies proves ever more challenging, corporate oversight of net zero has never been more critical. Ability to execute against net zero targets cost effectively and streamline risk management doesn’t just become crucial to navigate the increasingly complex and dynamic net zero landscape successfully, but will ensure that every business can play its role in building towards a more sustainable future.
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