The newly released 23rd Annual Global CEO survey from PwC delivered a surprise to champions of a more sustainable world. PwC asked CEOs around the world to rank the biggest threats to their companies’ growth. Here’s how CEOs ranked those threats:
Climate change ranks Number 11 as a threat, up from 13th place in 2019. Twenty four percent of global CEOs are concerned about climate change and environmental damage, a 5 percent increase compared to 2019.
Many readers of the report were surprised and disappointed that climate change failed to crack the Top 10 worry list. But it’s important to understand what CEOs actually told PwC about climate change. They did not say climate change is unimportant. Rather, they see climate change as a growth opportunity, not a threat.
Here’s what the report said:
The tide has turned on climate change. Organisations worldwide are starting to recognise its risks and even its potential opportunities. Compared with ten years ago, CEOs today are far more likely to see the benefits of going ‘green,’ such as reputational advantage, new product and service opportunities, and government or financial incentives. Looking at the results on a regional basis, there are some expected findings and a few concerning ones. Organisations in Western Europe and Asia- Pacific are furthest ahead in assessing the transition risks to a greener economy, which is not surprising, given government commitments to sustainability in these regions. By contrast, in the Middle East, where economies are most exposed to the global progression towards clean energy, organisations are comparatively behind in assessing the changes likely to result from a low-carbon future.
Bob Moritz, chair of PwC International, stressed this narrative in an interview with CNBC during the Davos summit. He said:
For this year’s survey, we actually saw . . . the CEOs saying, ‘It’s an opportunity. It’s an opportunity for differentiation. If, in fact, we can build in climate-related initiatives into our supply chain management, into our customer experience, into the production of our goods and services, that creates opportunity compared to others, because the stakeholders, those that are purchasing, are actually trying to differentiate right now.’
Likewise, the other group that’s differentiating is the employees. We see much more employee activism. So if an organization is not focused on climate, it’s less likely they’re going to get the people wanting to join those organizations.
The difference between opportunity and threat is an important nuance. Now, you can argue convincingly that CEOs should view climate change as a growth threat. At Investis Digital, we’ve been blogging a lot about how changing investing sentiment, consumer buying preferences, and employee values are compelling CEOs to articulate their sustainability/ESG stories. The message is clear: CEOs need to make a commitment to sustainability/ESG – and they need to tell the world about that commitment – or else fall out of step with the priorities of investors, customers, and employees.
Sustainability/ESG: The Differentiation Opportunity
That said, the PwC report is absolutely dead-on: in 2020, sustainability/ESG is an opportunity to differentiate. If you’re a communications professional within IR, HR, or MarCom, consider the PwC report a tool to help you discuss with your CEO ways to incorporate sustainability/ESG into your company’s narrative. Many CEOs might not connect with a message that stresses the need to embrace sustainability/ESG or else fall behind or suffer a hit to their profitability. Certainly those messages are true – but they might not resonate with a CEO looking at their short-term quarterly finance reports.
Instead, the PwC report suggests that CEOs might be more receptive to a message about how a sustainability/ESG narrative can power their growth and differentiate themselves with an emerging generation of shareholders, customers, and employees.
How to Seize the Opportunity to Tell Your Sustainability/ESG Story
In a December Forbes column, “How to Effectively Tell Your Brand’s Sustainability/ESG Story,” our CEO Don Scales discussed ways that businesses can do just that. For instance, those tactics include making it easy for investors, employees, and customers to understand what exactly your company is doing to be sustainable in your actions. You need a home base to tell your story — a platform brimming with success stories, employee testimonials and other content. And it needs to be engaging, relying on multimedia to captivate your audience. We’ve worked with businesses that have, in fact, differentiated themselves through sustainability/ESG, as noted in this client case study.
If you’re a communications professional within IR, HR, or MarCom, don’t despair that sustainability/ESG ranks lower than perhaps many expected it to be on the CEO worry list. Seize the opportunity to position sustainability/ESG as an opportunity. Meet CEOs where they are.
For more insight into why ESG is shaping the corporate agenda, check out Investis Digital’s white paper, The New ESG Agenda. The white paper is based on our own extensive helping companies find a clear, authentic, and inspiring voice to engage with their audiences on ESG issues, driving advocacy, and engagement.