Most businesses affirm that implementing sustainability strategies leads to long-term monetary benefits, according to a new report from Morgan Stanley.
In the coming month, New York City will play host to Climate Week 2025, as dozens of companies gear up to discuss and showcase their sustainability and climate resilience initiatives. This heightened focus on these issues is not without reason, as a growing number of companies are recognising the business value that can be derived from a sustainability-climate resilience lens.
According to a recent study, over two-thirds of companies believe that physical and transition risks from climate could impact demand, costs, investment needs, and relationships with investors over the next five years. This concern is notably highest in North America, where companies are significantly more concerned about the potential impact of climate-related events on their business performance.
One such company is Dell, which is launching a sustainable computer. The study, conducted by Deloitte, found that meeting the requirements associated with sustainability and climate resilience can unlock business value, a sentiment echoed by Kristen Sullivan, Deloitte's head of Sustainability Services.
The study also revealed that climate-related events have affected companies in various ways, including increased costs, worker disruption, and losses in revenue. However, looking through a sustainability-climate resilience lens can help companies develop new products from what was previously considered "waste" and increase their use of renewable energy technologies to reduce costs and increase business stability.
Technologies, including AI, are key enablers for sustainability-related practices, according to the study. Global companies understand that massive innovation is key to capitalising on sustainability and climate resilience as drivers of business value and are recruiting talent to achieve this.
The Morgan Stanley study found that over 57% of companies surveyed have been affected by extreme weather events over the last year, with 73% of Asia Pacific region companies affected. Despite this, 80% of companies feel either "very prepared" or "somewhat prepared" for the impact of climate-related events.
However, the high level of investment required and political and macroeconomic uncertainties are key constraints for companies implementing sustainability strategies. To counteract these challenges, companies in North America, Asia-Pacific, and Europe plan to enhance their resilience against climate risks and improve sustainability priorities over the next five years.
Financial institutions are integrating ESG (Environmental, Social, and Governance) into their business strategies and risk management, as well as developing robust sustainability reporting backed by verified data. Roles like Chief Sustainability Officers are being strengthened to meet rising ESG regulations and counter greenwashing, especially in Europe where stricter rules come into force in 2025.
Specific trilateral research projects and programs on sustainability and resilience, notably in agri-food chains, are planned in Europe with cooperation between companies and research institutions. For instance, the German Priority Programme 2575 is focusing on sustainability and resilience under multiple crises.
Telle Whitney, a veteran in technology, argues that culture and talent are key to driving innovation in both big and small companies. Her book, "Rebooting Culture: How to Ignite Innovation and Build Organizations Where Everyone Can Thrive," emphasises the importance of listening to diverse perspectives and being receptive to ideas to foster innovation.
Over 65% of companies are meeting or exceeding their performance expectations for sustainability-related practices. The Electric Ladies Podcast, with over 400 leaders and innovators, tells stories of how SWOT analyses that include increasing resilience to climate-related events and reducing environmental impact reveal significant untapped business value.
Workforce disruptions due to climate-related events are a major concern for North American companies (69%), as is the loss of revenue from business or supply chain interruptions (75%). As the world continues to grapple with the impacts of climate change, it is clear that sustainability and climate resilience are not just environmental concerns, but business imperatives as well.
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