A study reveals that only 41% of companies have plans to mitigate climate change risks, with major emitters like China (8%) and the U.S. (32%) lagging significantly. Most firms lack financial commitments to these plans, stressing the need for a strategic approach and government collaboration to achieve future targets like net zero by 2050.
A recent analysis has revealed that a significant number of businesses are inadequately prepared to address the risks posed by climate change. According to the EY 2024 Global Climate Action Barometer, only 41% of surveyed companies have established transition plans, while over one-third (38%) do not intend to implement such strategies. Notably, larger emitters such as firms in China (8%) and the United States (32%) exhibit even lower adoption rates compared to 66% in the United Kingdom and 59% across Europe. The study suggests that robust regulatory frameworks play a crucial role in driving companies towards climate action. However, financial pledges to support these plans remain nominal, with only 4% of companies disclosing operational expenditure and 17% capital expenditure for transition purposes. Dr. Matthew Bell, EY’s global leader in climate change and sustainability services, emphasized that businesses need to recognize climate change as a strategic opportunity, encouraging investment in resilience and adaptation to emerging markets. Furthermore, Dr. Bell noted that organizations require a comprehensive understanding of their supply chains concerning climate risks, especially as regulations tighten. He stated, “Every time I’m involved in those conversations, it’s almost like you’ve turned a light bulb on above people’s heads. It leads to change behavior inside the organization.” To facilitate a smoother transition, collaboration between national governments and businesses is essential to create conducive policy environments. Christophe Lumsden, the global leader for EY’s climate and decarbonization, remarked that while short-term targets can be effective, they serve as mere stepping stones to the larger goal of achieving net-zero emissions by 2050. Overall, the findings urge businesses to take proactive measures in their climate strategies to avoid potential risks, optimize operations, and seize future opportunities that climate change presents.
The analysis conducted by EY highlights the urgent need for businesses to develop cohesive strategies to combat climate change. The lack of transition planning among a significant portion of companies underscores a broader issue where, despite increasing awareness of climate risks, only a fraction of firms are prepared to take actionable steps. This topic is critical not only from an environmental standpoint but also for ensuring long-term corporate sustainability. As regulatory demands increase globally, businesses must align their strategies with evolving expectations.
The EY 2024 Global Climate Action Barometer underscores the alarming trend of inadequate preparation for climate change risks among businesses globally. With only 41% of companies implementing transition plans and fewer making financial commitments, the study calls for immediate action. The insights from Dr. Matthew Bell and Christophe Lumsden highlight the necessity for businesses to see climate change as both a risk and an opportunity, necessitating collaboration with government entities to achieve strategic climate goals efficiently. Therefore, developing comprehensive climate strategies is imperative for long-term sustainability and resilience.
Original Source: www.forbes.com
