Understanding the business response to climate change and resource scarcity

June 3, 2015 – New international business research from the Carbon Trust finds company governance failures are a key reason for weak business response on environmental sustainability.

• 70 percent of global business leaders confident that action taken by consumers, governments, and investors will force the change to an environmentally sustainable future.

• 76 percent see bottom line risks from direct impacts of climate change, and 84 percent see business opportunity in an environmentally sustainable future.

• Half believe they would have to fundamentally change products, services, or business models if drivers for environmental sustainability become strong.

• Of those that claim to be aware of how they compare with competitors on environmental sustainability, 99 percent believe they are at least average for their sector, with half seeing themselves as leaders.

Corporate boards are not adequately assessing and quantifying the opportunities and risks to company value from climate change and resource scarcity beyond the business planning horizon, according to a new report released today by the Carbon Trust.

The report, Titans or Titanics? Understanding the business response to climate change and resource scarcity, looks in detail at why businesses action today is nowhere near sufficient to address the major environmental challenges faced by society.

This finds that businesses are living in two realities: they recognise and accept the risks and opportunities of an environmentally sustainable future, but continue to focus on the short-term. Despite the perception that drivers for change will continue to become stronger in the near future, most businesses appear to have no clear vision on how to manage the transition effectively.

Insights are based on six months of in-depth interviews with a range of experts from business, finance, government, academia, and civil society. The Carbon Trust also commissioned independent market research interviews with 229 board-level executive decision-makers across five regions: the UK, South Africa, Southeast Asia, Latin America, and the USA.

Explaining the important role for boards, Tom Delay, Chief Executive of the Carbon Trust, said:

“Businesses are both a problem and the solution. They bring together the productive, technical and financial capabilities to lead the global transition to sustainable, low carbon future. But it is crucial that boards properly assess and quantify the long-term risks and value-creation opportunities from climate change and resource scarcity, steering a safe course in dangerous waters.”

Sir Mark Moody-Stuart, Chairman of the Foundation for the UN Global Compact, who has previously served as Chairman of Shell and Anglo American, and on the boards of companies including HSBC and Accenture, added his voice to the call for board members to take a greater role:

“The report highlights the dichotomy of the two realities acknowledged by most businesses – the needs which must be met today, while beginning on what is often still a relatively modest process of change, and the very much more radical changes needed if we are to meet what can sometimes seem still distant challenges.” he said.

“This gap in perceived realities has closed only modestly over the last twenty years. Closing it at the required speed will regard unprecedented alignment and combined action by business, investors, governments and consumers. No one group can achieve progress without the support of the others.”

Download the full report here

Titans or Titanics? Understanding the business response to climate change and resource scarcity

Infographic: Understanding the business response to climate change and resource scarcity

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