A study by EY shows that only 41% of businesses have transition plans for climate change, with 38% having no intention of adopting such strategies. Adoption is particularly low among top emitters, with 8% in China and 32% in the U.S. Conversely, the U.K. and Europe show higher adoption rates. Regulatory frameworks significantly influence these statistics, emphasizing the need for companies to view climate change as a strategic opportunity for investment and growth.
A recent study has revealed that a significant portion of businesses are ill-prepared for the potential risks posed by climate change. According to the EY 2024 Global Climate Action Barometer, only 41% of over 1,400 companies surveyed globally have implemented transition plans aimed at mitigating these risks. Alarmingly, 38% of respondents indicated they have no plans to adopt such strategies, extbf{highlighting a pervasive lack of action among global firms.} Furthermore, the research found that the adoption of these plans is particularly low amongst the world’s major greenhouse gas emitters, with only 8% in China and 32% in the United States having established mitigation strategies, as compared to 66% in the United Kingdom and 59% in Europe. The report indicates that effective regulatory frameworks in certain regions have contributed to higher rates of transition plan adoption, underscoring the critical role that policy plays in driving corporate action. Alarmingly, merely 4% of companies have disclosed operational expenditures related to climate transition, while just 17% have reported capital expenditures for their plans. In an interview, Dr. Matthew Bell, EY’s leader of global climate change and sustainability services, urged that companies must begin to perceive climate change as a strategic opportunity rather than a challenge. He noted, “Now is the time to make all the right investments and position yourself for the next few decades, but only a few companies are seeing that at the moment.” Dr. Bell also emphasized the importance of understanding carbon emissions in the supply chain and indicated that many organizations have conducted climate analysis but have not chosen to disclose these findings. He stated that transitions are profoundly beneficial, as they unify leadership across departments towards a common goal, thus illuminating pathways for behavior change within the organization. Moreover, he advocated for stronger engagement between national governments and businesses to create an effective policy framework for this transformation. Christophe Lumsden, EY’s global climate and decarbonization leader, cautioned that while short-term targets could be effective, the current situation necessitates a focus on long-term goals, stating, “This is not one of those times.”
The topic of climate change and corporate preparedness is increasingly relevant as businesses face mounting pressure to address environmental risks and align with net zero commitments. The study in focus, the EY 2024 Global Climate Action Barometer, provides insights into how organizations are currently responding to these challenges. With only a small percentage of companies implementing mitigation plans, it highlights the necessity for systematic regulatory frameworks that can encourage and facilitate corporate action towards sustainability. Furthermore, the differing degrees of commitment seen in various countries underscores the global disparity in climate action readiness among major corporations, particularly those in high-emission regions.
In conclusion, the EY 2024 Global Climate Action Barometer reveals that a majority of firms are unprepared for the risks associated with climate change, with only a small percentage having developed transition plans. The significant gap in adoption rates, particularly among the largest emitters, highlights the urgent need for regulatory measures to incentivize action. Furthermore, integrating climate strategies into core business functions can transform perceived risks into strategic opportunities, necessitating a collective effort between businesses and governments to foster an effective climate action framework.
Original Source: www.forbes.com
