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January 15, 2024

PwC: most CEOs have not incorporated climate risk into financial planning

Record floods wash away a bridge in China. PwC found only 47 per cent of CEOs had adapted their businesses  by, for example, ensuring their supply chains are protected from climate-linked disasters. (Photo: Bloomberg)
Record floods wash away a bridge in China. PwC found only 47 per cent of CEOs had adapted their businesses by, for example, ensuring their supply chains are protected from climate-linked disasters. (Photo: Bloomberg)

Less than half of CEOs worldwide have made progress on incorporating climate risk into their financial planning – and over a third have no intention of doing so, a global survey has found

Only 45 per cent of global CEOs have either begun or fully incorporated climate risks into their financial planning, an annual survey by PwC has found. A further 31 per cent of respondents said they had no intention of doing so. 

PwC found that only 47 per cent of CEOs had adapted their businesses to account for physical climate risks by, for example, ensuring that physical locations and supply chains are protected from climate-linked disasters. Twenty-nine per cent of respondents said they had no plans to protect their physical assets and workforce from climate risk.

The survey, which interviewed 4,702 CEOs across 105 countries and territories, found that almost half (45 per cent) did not believe their business would be viable in the next decade “if it continues on its current path” – up from 39 per cent in PwC’s 2023 survey. 

The report attributes CEOs’ concerns about business viability to “megatrends” such as climate change and technological disruption, including the growth of AI capabilities.

CEOs were relatively positive about overall economic growth, with 38 per cent of respondents optimistic about global economic growth prospects over the next 12 months, up from 18 per cent in 2023. However, they were more pessimistic about their own businesses.

“Despite rising optimism about the global economy, [CEOs] are actually less optimistic than last year about their own revenue prospects, and more acutely aware of the need for fundamental reinvention of their business […] to address the challenges and opportunities of the climate transition,” PwC global chair Bob Moritz said in a statement.

Nearly one third of CEOs (30 per cent) expect climate change to alter the way they “create, deliver, and capture value” over the next three years. Asked to name the greatest barriers to decarbonisation, 54 per cent cited regulatory complexity and 51 per cent cited lower economic returns for climate-friendly investments. 

The report is available to read here.

A service from the Financial Times