A recent report from EY shows that only 41% of businesses have transition plans to address climate change risks. The analysis of over 1,400 companies worldwide indicates that many firms, especially in high-emission countries, lack the commitment to necessary climate strategies. Effective regulatory measures in Europe and the U.K. have resulted in higher adoption rates compared to the U.S. and China. Experts advocate for businesses to view climate change as a strategic opportunity rather than a risk.
A recent study reveals that the majority of businesses are failing to adequately prepare for the risks posed by climate change. The EY 2024 Global Climate Action Barometer indicates that only 41% of surveyed firms have established transition plans aimed at mitigating climate-related risks. Among more than 1,400 companies analyzed across 51 countries, 21% acknowledged intentions to create such plans, while 38% outright rejected the idea. Notably, adoption rates are significantly lower in major emitting countries, with only 8% of Chinese firms and 32% of U.S. firms implementing mitigation strategies, in stark contrast to the 66% and 59% adoption rates found in the U.K. and Europe, respectively. This discrepancy is largely attributed to effective regulatory frameworks that encourage action. Alarmingly, a mere 4% of companies have revealed operational expenditures to support their climate efforts, while only 17% report capital expenditures related to these plans. Dr. Matthew Bell, leader of EY’s global climate change and sustainability services, advocates for businesses to perceive climate change as a strategic opportunity. He emphasizes the necessity of investment in resilience and adaptability to capitalize on emerging markets. He remarked, “We know so much about climate change. It’s like we have been given a crystal ball into the future.” Dr. Bell also points out the limited understanding that organizations possess regarding their supply chains in terms of climate and carbon emissions. Furthermore, while climate change analyses have been conducted by many firms, disclosure of this information remains rare. He asserts that every organization partnering with EY on transition plans has reported significant benefits from the process. Additionally, Dr. Bell highlighted the importance of collaboration among leadership teams in developing comprehensive transition strategies. He noted, “Every time I’m involved in those conversations, it’s almost like you’ve turned a light bulb on above people’s heads.” Such collaboration fosters behavioral change and provides a strategic perspective. He additionally emphasizes the role of national governments in creating favorable policy environments for businesses aiming to transition effectively. Christophe Lumsden, EY’s global climate and decarbonization leader, declared that while short-term targets may be effective in some scenarios, this period demands more than temporary metrics. He concluded that interim goals should serve merely as foundational steps toward achieving net-zero emissions by 2050.
The findings in this report stem from the EY 2024 Global Climate Action Barometer, which surveyed over 1,400 businesses globally to assess their preparedness for climate change impacts. This analysis highlights a concerning trend of insufficient planning among firms regarding climate risk mitigation, especially in heavily industrialized regions. Regulatory frameworks in various countries are identified as pivotal factors influencing the adoption of transition plans, suggesting that stronger policies could encourage greater corporate responsibility and action in the face of climate change.
In summary, the lack of adequate transition plans among businesses poses significant risks as climate change impacts become increasingly severe. The significant disparity in climate action adoption rates between major emitters and other regions underscores an urgent need for enhanced regulations and corporate responsibility. Dr. Bell’s insights reveal the potential benefits of comprehensive transition planning, where strategic collaboration plays a crucial role in reshaping business approaches to climate change. Without immediate and sustainable action, the opportunity to align with emerging markets and ensure long-term resilience will diminish for many organizations.
Original Source: www.forbes.com
