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A Warmer World

Just half of CEOs see climate change as a risk to their business

Samantha Fields Aug 23, 2023
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Homes destroyed by the wildfire in Lahaina, Hawaii. Despite multiple severe weather events this summer, only a small minority of CEOs say climate change poses a "serious" risk to their business. Justin Sullivan/Getty Images
A Warmer World

Just half of CEOs see climate change as a risk to their business

Samantha Fields Aug 23, 2023
Heard on:
Homes destroyed by the wildfire in Lahaina, Hawaii. Despite multiple severe weather events this summer, only a small minority of CEOs say climate change poses a "serious" risk to their business. Justin Sullivan/Getty Images
HTML EMBED:
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If this summer has made one thing clear, it’s that extreme weather is becoming more common. The U.S. has suffered with floods and extreme heat and wildfires.

Yet just half of CEOs think of climate change as a risk to their business and just 19% think of it as a serious risk, according to a recent PricewaterhouseCoopers survey of business executives. That figure’s actually down from 23% last year.

The survey also found that fewer than a quarter of businesses are preparing for potential climate-related disruptions in the next 12 to 18 months. But the climate crisis can affect businesses in all sorts of ways.

“From supply chains to the location of plants, to even things like, ‘Do I have enough water in my vicinity in the future the next couple of years that I need for my manufacturing?'” said Sanjay Patnaik at the Brookings Institution.

There are a bunch of surveys like PwC’s that show most companies still aren’t doing much to mitigate those risks, Patnaik said — except in industries that are more obviously and immediately vulnerable.

“For instance, food,” he said. “Because if you’re in a business of chocolate and coffee, you start seeing the impacts already, and so you start preparing for a supply chain for this.” But those companies are in the minority.

Neil Dhar at PricewaterhouseCoopers said most executives he talks to are thinking about climate change.

“When investors, your board, your employees, your customers are asking about a specific topic, it’s got to be front and center,” he said.

But “front and center” doesn’t necessarily mean executives are doing anything about it. “There’s a difference between having concerns and actually taking some action that involves investing and spending money on it,” Dhar said.

Ultimately, what it comes down to is money, per Bhaskar Chakravorti at Tufts University’s Fletcher School.

“Most CEOs are under pressure to deliver results to analysts and to the market,” he said. “They are in their jobs for less than five years on average. And the returns from any investment they make has a much longer horizon.”

So, there’s not a lot of incentive. Plus, Chakravorti noted that CEOs are human, and most humans aren’t great at planning for the future — even though this summer has brought back-to-back climate disasters.

“Are we turning down our air conditioners? Are we eating less meat? Most of us are not,” Chakravorti said. “So just like we, as consumers, are not really cutting back to a meaningful degree,” neither are companies.

And chances are, Chakravorti said, most won’t unless the government makes them.

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