Dive Brief:
- Sixty-eight percent of business leaders think a disorderly climate transition — a transition to a low-carbon or net-zero economy that is unplanned and poorly coordinated — is more likely to occur than it was a year ago, according to an annual survey of more than 500 global executives and senior managers, released Monday by the World Business Council for Sustainable Development.That share rises to 94% for North American executives.
- Almost half (47%) of leaders reported facing higher costs in the past year related to climate change, such as extreme weather events, heat stress, flooding, drought or water scarcity, and 49% expect these costs to continue to increase over the next 12 months.
- Nearly all leaders (98%) said they considered a disorderly transition to be a risk to their business, with 40% considering it a “significant” or “critical” risk. But only 15% of respondents said their companies are fully prepared to manage a disorderly climate transition. To that end, 85% of leaders said they prefer early or gradual policy changes, compared to 4% who preferred to delay.
Dive Insight:
A disorderly climate transition could result in “abrupt policy shifts, climate tipping points, price shocks or social disruption,” according to WBCSD. Business leaders have already experienced increased costs due to supply chain disruptions (reported by 54% of respondents), commodity or input price volatility (38%), damage to physical infrastructure (38%), and insurance costs from higher premiums or loss of coverage (38%), according to the survey.
“Signals of a disorderly transition are intensifying, with concerns that without stronger coordination and consistent signals from governments and policymakers, these pressures will only intensify, resulting in higher costs for businesses and consumers,” said Peter Bakker, President and CEO of the WBCSD, in the report.
This is the third annual survey from the WBCSD, and it included responses from leaders at more than 500 companies in 50 countries, representing about $2 trillion in combined revenue.
In spite of such challenges, 89% of business leaders said they have either kept pace or increased their climate-related investments over the past year, and twice as many leaders reported strengthening climate targets in 2025 (38%) than in last year’s survey. Leaders said they are scaling measures such as clean power, electrification, circularity and regenerative agriculture not solely as climate measures, but because they’re the most competitive, secure and resilient options available, the report found through interviews. In addition, 92% of leaders said they expect sustainability to be a source of competitive advantage over the next 5 to 10 years.
Fifty-two percent of respondents cited risk management and regulatory compliance and resilience as the main drivers of their company’s sustainability strategy, and 46% of respondents cited future growth opportunities as a main driver. In North America, 68% of leaders said customer demand was the top driver of sustainability strategies.
Meanwhile, sustainability solutions are becoming more appealing from a business standpoint, respondents said. Power generation and storage was cited by 80% of leaders as becoming more attractive in the past 12 months. Meanwhile, 73% said power transmission and grids have become more attractive over the past year, and 72% said regenerative agriculture is more appealing than 12 months ago.
When asked to pick three priorities for policy changes, business leaders opted for long-term policy strategy and frameworks (60%); supply-side incentives (35%), including producer subsidies, tax incentives, and blended finance; investment in clean energy (30%); and demand creation policies such as mandates, procurement, and consumer subsidies (30%).
To enable private sector transition investments, 89% of respondents said that international collaboration between governments on standards, certifications, and trade was either “somewhat” or “extremely important,” with 81% of North American leaders reporting such cooperation was “extremely important.”
