Seventy percent of global executives plan to increase investment in climate initiatives over the next two years, according to an Ernst & Young survey.
Out of the 300 executives surveyed by the consultancy, nearly half said that their companies will invest more than 0.5% of their revenue. Only companies with annual revenues of more than $1 billion were included, so this represents a minimum anticipated spend of $5 million-50 million annually.
“With all the uncertainty following Copenhagen, many business commentators were expecting the momentum in climate change investments to slow,” said Doug Johnston, UK director of climate change and sustainability services at Ernst & Young. “Our research has shown something very different.”
Customer demand is one reason, with 89% saying changing customer preferences have created significant drivers for action and innovation. “We expect to see the emergence of a new type of customer who would be a lot more concerned about climate change issues. We are going to take more actions that advocate environmentally responsible practices within the supply chain,” said one survey respondent.
The survey also found that more than 40% of companies now believe equity analysts link a companies’ response to climate change with valuations.
In the coming 12 months, 92% of respondents consider energy costs to be a very important or important driver. Investing in energy efficiency tops the list of investment plans, with 82% of respondents expecting to undertake investments in this area in the next 12 months.
But approximately three in four respondents said it will be either very challenging or challenging to execute their climate-related goals in the next two years. Within this context, product development poses the biggest challenge, according to respondents.
“Businesses will need to prioritise investments to capture opportunities and mitigate risks in response to the growing number of climate change policies, in developing and developed countries, since the December Copenhagen meeting," said Lorraine Stephenson, a partner at Ernst & Young.
Climate change now resonates in companies’ board rooms as never before. More than 90% of executives surveyed said that climate change governance rests with C-suite executives or board members.
The report gathered information from companies in industries including avition, banking, media, oil and gas, and power, in more than 16 countries.