It’s becoming increasingly apparent that a warming planet and extreme weather events are having a direct impact on nearly every economic sector worldwide—yet corporate leaders believe sustainability and climate change are low on the list of the biggest crises they currently face, according to a new research report conducted by South Korea-based global business network SK Group. What they really care about is keeping the lights on amidst rising inflation, supply chain disruptions and the ongoing impacts of the COVID pandemic.
This report set out to identify the current viewpoints of sustainability as a crisis, understand how organizations have responded to emergencies in the past, and how they can best leverage their experiences with past crises to design and implement ESG programs and initiatives moving forward.
Climate plays second fiddle
“Bottom-line business issues still take precedence over broader global issues, such as ESG initiatives and sustainability,” said Hyunghee Lee, president, Social Value Committee, SK SUPEX Council, in a news release. “This is concerning given that climate change poses a threat to every person, organization and company. The silver lining is that businesses have become adept at adjusting to crises. If we can get more corporate leaders to understand the implications of climate inaction, we have a chance to transform industries and significantly reduce greenhouse gas emissions.”
Bouncing back from crisis
Crises impact organizations differently. About one in 10 survey respondents said a crisis over the past five years threatened the existence of their organization. Additionally, 41 percent said the event significantly impacted the company’s ability to operate or grow.
Other crises were less severe, with 46% of respondents saying the problem only somewhat limited the company’s ability to operate or grow. The reality is that any crisis can have a significant impact, dramatically changing the way most organizations and teams work. Some of the biggest changes occurred in terms of budgets and both human and technological resources.
But crises can also leave a lasting positive impact. When businesses survive a major crisis, they can emerge stronger and more efficient than ever before. In fact, 84 percent of respondents agree that a crisis has helped rally their people together towards a shared goal. Additionally, 70 percent said their organization’s strategy implementation capabilities grew stronger as a result of the crisis and 61 percent said their company is now better off than it would have been if it had never faced the crisis.
Barriers to action
ESG and business sustainability have had a problem with turning promises into actions because sustainability isn’t viewed as a crisis. So what can be done to make companies better understand the connection between climate change and economic stability?
At some point, both investors and companies will come to the realization that being sustainable is not just good for the planet—it is also good for the bottom line. But, again, why have so many companies failed to take decisive action? Resistance to change is the most common challenge experienced by organizations looking to implement sustainability initiatives, cited by 37% of respondents. Additionally, lack of staff resources along with employee mindset/behavior are top concerns, cited by 31 percent of respondents, respectively.
Another striking finding from the study is that respondents feel that their organization is either often or sometimes adaptable to adopting sustainability strategies in the face of business challenges, yet only 8 percent feel this way consistently.
The good news is that a majority of respondents believe that organizations bear the most responsibility for financing sustainability programs or initiatives. Another 26 percent said this responsibility falls on the government, while 12 percent said shareholders; only 6 percent believe this responsibility falls on the customer. What’s more, 75 percent say their organization’s sustainability strategy is critical to the overall success of their business. About half of organizations have an existing clearly defined sustainability strategy and one-third do not.
SK Group has committed to cutting 200 million tons of carbon emissions across its companies by 2030. SK, which has businesses in the semiconductor, energy and life sciences sectors, among others, is investing $52 billion in the U.S. by 2030 with the majority of new investments focused on clean energy and technologies.
The survey was fielded online and reached a total of 504 U.S. professionals with a job role of Manager or higher.