Climate-related investments are six times more likely to increase revenue yet firms remain cautious due to regulatory complexities, according to a report by PwC report launched during the World Economic Forum Annual Meeting in Davos
The report – PwC’s 28th Annual Global CEO Survey – collected responses from 4,701 chief executives across 109 countries and territories. It asked CEOs to monitor the financial impact of climate-related investments over the last five years.
They revealed when investments were moved to climate-related issues, such as biodiversity and net-zero, it was six times more likely to have resulted in increased revenue (33%) than decreased revenue (5%).
Further, nearly two-thirds of CEOs reported that climate-related investments had either reduced costs or had no significant impact on costs. The report also found there is a personal drive towards these investments, where more than half of CEOs (56%) said their personal incentive compensation is linked to sustainability metrics.
However, the report said challenges remain around initiating climate-related investments. It found that CEOs who made such investments cite regulatory complexity as the top factor (24%) inhibiting their companies’ ability to initiate those investments. This is opposed to lower returns on investment (18%) or lack of buy-in from management or the board (6%).
Carol Stubbings, global chief commercial officer at PwC, said: “Three-plus decades of digitisation have started to break down formerly impermeable boundaries between sectors, while the combined impact of the climate transition, Artificial Intelligence (AI), and other megatrends will hasten the process of reconfiguration.
“This survey shows that business leaders are facing this future with a combination of optimism about the economy and realism that business needs to fundamentally reinvent how it creates value if it is to thrive in the future.”
Mohamed Kande, global chairman of PwC, added: “This year’s CEO Survey findings highlight a stark juxtaposition – business leaders around the world are optimistic about the year ahead, but also know they must re-invent how they create, deliver and capture value.
“Emerging technologies such as GenAI, shifts in geopolitics, and the climate transition are all revolutionising how the economy works. New business ecosystems are forming, transforming how companies compete and create value. To thrive, business leaders must act now and take bold decisions around their strategy – ranging from people, footprint and supply chain, right through to reinventing their business model.”
