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Fewer than half of businesses have developed transition plans to help them mitigate the risks of climate change, according to a new analysis.
According to the EY 2024 Global Climate Action Barometerjust 41% of businesses surveyed have such plans, and the vast majority have yet to make a financial commitment to prepare for net zero.
The analysis of more than 1,400 businesses in 51 counties showed that a fifth (21%) of companies said they intend to develop plans to mitigate the risks of climate change.
But more than a third (38%) said they had no intention of adopting such transition plans.
The analysis also found that the adoption of transition plans is even lower among the world’s biggest emitters.
It found that just 8% in China and just 32% in the US have adopted mitigation plans, while in the UK and Europe the figure is 66% and 59%, respectively.
The study concludes that this is largely the result of successful regulatory regimes, highlighting the importance of regulation as a vehicle for action.
It also found that few companies have made clear financial commitments to support their transition plans.
Just 4% have disclosed operating costs and 17% reported capital costs to help execute plans.
EY’s head of global climate change and sustainability services, Dr. Matthew Bell said more companies should see climate change as a “strategic opportunity” in an interview.
Dr Bell said many start-ups will need to invest in key areas and make their operations more resilient so they can take advantage of the new markets that will develop.
“We know so much about climate change,” he told me. “It’s like we’ve been given a crystal ball into the future.
“Now is the time to make all the right investments and position yourself for decades to come, but few companies are seeing that right now.”
He added that very few companies understand their supply chain in terms of climate change and carbon emissions beyond the first tier, although regulations in many parts of the world are or will require them to do so.
In addition, Dr. Bell said that organizations have done analysis of climate change, but for whatever reason have chosen not to disclose that information yet.
However, he said every organization EY has worked with on a transition plan has found it a “massively beneficial exercise”.
Dr Bell said it is mainly because he brings the chief risk officer, the chief strategy officer, the climate and sustainability leader together to look at the data and analyze things.
“You can’t talk about a transition plan without the involvement of all these leaders across the businesses,” he told me.
“Every time I get involved in these conversations, it’s almost like you’ve turned on a light bulb over people’s heads. It leads to behavioral change within the organization. “
And second, he said it gives that organization a “window into the future” that helps its strategy function be more strategic.
He also said that national governments should work with businesses to create the right policy environment to help them achieve this transformation.
EY’s global climate and decarbonisation leader Christophe Lumsden said there may be times when short-term targets do the trick, but “this is not one of those times” in a statement.
Lumsden added that the targets for the next five years should be seen as a stepping stone to the 2050 net zero targets, which are never an end in themselves.
