How CEOs can accelerate progress on climate risks transcript

Nadja Picard
Global Reporting Leader, PwC Germany

The impacts of climate change are too big to ignore. In 2022, global economic losses from natural catastrophes topped $275 billion.

Both CEOs and investors recognise the need to address climate change. But there's a disconnect between investors’ expectations and CEOs’ actions, as reviewed by our latest Global Investor Survey and our 2023 Global CEO Survey. 

It starts with a difference of risk perception. CEOs see climate change as less urgent than investors do. 22% of the investors we surveyed believe the companies they cover will be highly or extremely exposed to climate change in the coming year. But only 14% of CEOs said the same thing about their own companies. When asked to consider climate risk over the next five years, both groups showed more concern. But there's still a gap between investor expectations and company actions. 

Investors want climate action to be a business priority, but relatively few CEOs are reporting sufficient progress. For example, 75% of investors surveyed believe that reducing emissions is an effective course of action. But only 66% of CEOs surveyed said that they were taking action on this.

Similarly, on driving climate friendly innovation, 73% of investors expected to see this happening, but only 61% of CEOs confirm this was in progress or completed.

On protecting physical assets, the gap persisted with 56% of investors surveyed expecting action and only 44% of CEOs taking it.

CEOs’ actions are falling short of investors’ expectations. There's work to be done to close the gap.

How can CEOs rise to meet investors’ expectations? 

They can by making a clear financial case for responding to climate change. Profitability and innovation are priorities for both CEOs and investors. More than a third of CEOs share investors’ concerns that the energy transition could affect profitability in the long term.

CEOs must show financial discipline. Investors not only want to see positive financial results, they also want companies to disclose their sustainability-related financial risks and opportunities. When it comes to companies’ sustainability disclosures, investors are wary of greenwashing. CEOs can improve reporting by making sure that disclosures are decision-useful to investors relevant to their business, and have a high level of reliability.

By engaging with investors and taking action today, CEOs can ensure they're in a stronger position tomorrow.