Climate Change Ambitions vs. Actions

Executives have become more concerned about climate over the past few months, according to a recent survey, but are in many cases picking the low-hanging fruit when it comes to demonstrating a real commitment to moving the needle. Their reasons may be valid.

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A recent Deloitte survey of 2,000 C-level executives about sustainability in their businesses was published with the tagline, “The disconnect between ambition and impact.” Execs, of whom 20% were involved in “energy, resources, and industrials,” have become more concerned about climate over the past few months but are in many cases picking the low-hanging fruit when it comes to demonstrating a real commitment to make effective changes.

Eighty-eight percent agreed that with immediate action, the worst impacts of climate change could be limited. Just 8 months ago, in a similar Deloitte survey, 63% agreed. Bear in mind the pressure to act from their stakeholders also has and continues to escalate. Stakeholders were categorized as regulators/government, board members/management, consumers/clients, civil society (media, activists), shareholders/investors, competitors/peers, employees, and banks/lenders.

Yet, the top actions taken by the companies were “easy” ones. For example, using more sustainable materials (67%) vs. developing new climate-friendly products or services (49%), increasing the efficiency of energy use (e.g., in buildings) (66%) vs. requiring suppliers and business partners to meet specific criteria (46%), and reducing air travel post-pandemic (55%) vs. tying execs’ compensation to environmental sustainability performance (37%). Deloitte termed the more difficult actions as “needle-moving.” In each example, the easy actions topped the hard ones by about 20%.

Obstacles to moving the needle included difficulty measuring environmental impact and insufficient supply of sustainable or low-emissions inputs, listed by nearly a third and 27%, respectively. Cost was identified by 27%. Deloitte wondered if these were real obstacles, or just low priorities, and added that “many companies may be struggling to translate the cost of climate inaction.”

However, the survey results suggest that cost may not be the overriding concern. Rather, the measurement of improvement is not yet well defined, and the availability of and/or access to proven, dependable lower-emissions technology is lagging.

Sarah Chapman, global chief sustainability officer at financial services provider Manulife, commented in the survey, “Measurement and disclosure are complicated partially because there isn’t one standardization or framework. Understanding our Scope 3 emissions within our investment portfolio is challenging because we rely either on other companies’ reporting or on estimations.”

She makes a valid point—the US Environmental Protection Agency describes 15 categories of Scope 3 emissions, which include emissions both upstream and downstream of an organization’s activities. The Scope 3 emissions for one organization are the Scope 1 and 2 emissions of another organization. That requires a great deal of trust in others’ transparency and honesty, or even their understanding and ability to accurately report.

Consider the easy, low-hanging fruit as the first attempts to test the needle’s movement. Standardization of science-based measurement and disclosure, transparency, and proven technology may well be the trifecta that pushes the needle in the direction of tackling the hard changes needed in valid, meaningful ways.