The financial cost of climate change risk, estimated to be upwards of US$1 trillion, poses a significant threat to businesses and requires an improvement in skillset according to a survey by Eversheds Sutherland and KPMG. Responses from 113 UK directors and C-suite executives from major global companies revealed that company boards and management recognise the need to upskill to confront climate-related risks.

75% of UK senior decision makers who responded to the survey agreed their company’s management must improve its skillset to deal with climate-related risks, and that failure to do so could pose a wider threat to jobs. The survey also revealed that 83% of respondents think climate risk is a key factor in whether they will retain their job over the next five years.

As part of the research, more than 500 business leaders were also surveyed, with 73% agreeing management must improve its skillset to deal with climate-related risks. Assessing other human and cultural aspects to climate risk within organisations, the research found that 22% of respondents work for companies that offer remuneration incentives for directors to achieve decarbonisation targets.

Organisations are increasingly understanding that climate risk is a significant internal issue as much as it is about the external view, with the survey suggesting that there is a significant push from below, with 35% of respondents identifying that employees are leaving roles because they are unhappy about their employer’s climate impact.

40% of UK respondents indicated that employees have actively expressed dissatisfaction with their employer’s climate impact, while 12% of respondents indicated it is more difficult to recruit young people because of their views on the company’s climate impact.

Bridget Beals, co-head of climate risk at KPMG UK, said: “Climate change is a strategic risk issue. The results of our survey demonstrated that business leaders are waking up to that fact, with 65% of executives noting they need to better understand the climate risks their companies face. Whilst there has been big uptake in the number of companies disclosing in line with the TCFD framework in 2020, many are not yet quantifying the risks, which will make it difficult to drive the right strategic decisions at the board level. It is crucial that this changes over the next 12 months to drive the decarbonisation we need to meet the Paris targets.”

The report detailing the survey’s findings – ‘Climate change and corporate value: What companies really think’ – was announced at the Green Horizon Summit, a virtual conference held in place of the 2020 United Nations Climate Change Conference, COP26, which is now due to be held in 2021.

Former Bank of England governor Dr Mark Carney, who is now United Nations special envoy for climate action finance and a trustee of the World Economic Forum, said: “I would urge company boards to have a robust conversation around the risks and opportunities that climate change poses to their business; seek out this available help; and act early to mitigate climate change risks and turn them into commercial opportunities. Their focus will help break the tragedy of the horizon, creating sustainable business models that society is increasingly demanding and which future generations deserve.”

“Climate risk is a trillion-dollar problem that companies must face up to. It is not only about the physical impacts of climate change but also the transitional risk of failing to decarbonise sustainably and consequentially losing key stakeholders such as investors and customers.”

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