Responses to the recent MIT Sloan Management Review and BCG annual sustainability survey suggest that the risks of climate change are not a top concern in the business world. But new attention from business leaders could be building momentum for change.
Respondents to the recent MIT Sloan Management Review and BCG annual sustainability survey ranked climate change fairly low on their list of sustainability issues. Although 67% agreed climate change is real, only 11% ranked it as a very significant issue.
Those survey responses, from close to 2,000 managers in a wide range of industries, suggest that the risks of climate change are not a top concern in the business world. But a recent front-page New York Times article suggests otherwise.
Perceptions of climate change
Managers believe climate change is real, but their companies aren’t prepared.
According to “Industry Awakens to Threat of Climate Change,” there is a “growing view among American business leaders and mainstream economists” that climate change represents a substantial threat to supply chains, commodity costs and the global economy.
The article quotes leading academics and economists, and references two companies well known on the sustainability circuit — Nike and Coke — that are facing problems linked to climate change. Both organizations have well-publicized and oft-cited efforts to operate more sustainably; Nike in particular is an exemplar in the business world.
The attention of two companies and the corporate, political and cultural elite in Davos — who spent a day of the annual World Economic Forum devoted to “the threat of climate change” — may not a trend make. After all, our data shows that while there is a small subset of companies that clearly recognize the threat, most have yet to fully wake up to the risks climate change can pose to their businesses. Even for the 27% of our survey respondents who agreed strongly that climate change is a risk to their business, only 9% believed that their companies are prepared for those risks.
But regardless of how many companies engaging in climate change issues constitutes an awakening, the call to action is definitely getting louder, and it’s getting closer to home for businesses.
Several forthcoming reports commissioned (and written) by political heavyweights will add more credibility to the claim. One, entitled “Risky Business,” will look at the impacts of climate change with the impetus that, as former U.S. Treasury Secretary and report consultant Robert Rubin puts it, “business leaders are not adequately focused on the economic impact of climate change.” The Risky Business product is a joint initiative of Bloomberg Philanthropies, the office of former U.S. Secretary of the Treasury Hank Paulson and the research and educational group Next Generation.
Business observers have a natural inclination to say that market mechanisms are the only way to get industry to respond to climate issues, but it may be that peer pressure has a role, too. If being a leader in sustainability is something a competitor is getting mileage from, that may become reason enough for another company to get moving on climate issues.
Being a fast follower on climate change, on the other hand, may be more complex and require longer lead times than most companies are anticipating. Preparing for the effect of droughts on critical commodities, for example, is not something that can be done with a quick fix.
Bottom line: the more quickly industry does awaken to the threats of climate change, the better chance companies will have to prepare.