Climate Action: CEOs Say They’re Doing All They Can. Employees Disagree

Corporations were very visible during the recent COP negotiations, touting their green credentials and their drive to net zero. According to the U.N., to achieve the goal of keeping global warming to 1.5 degrees Celsius, “every company, every financial firm, every bank, insurer, and investor will need to change.”

So are business leaders and companies up to the challenge? Yes — but not yet. Recent sustainability research shows that a majority of businesses lack integrated strategies for combating climate change; leaders lack sustainability experience, responsibilities, and training; and employees lack a clear understanding of the organization’s actions and impact.

The Say/Do Divide on Environmental Action

Despite the urgent need for businesses to help address escalating environmental crises, climate change has not become a top priority for a vast majority of those occupying the corner office. Only 25% of C-suite leaders globally say climate change, rising sea levels or extreme weather events are critical existential threats to their corporate strategy. Just 43% say their organizations have sustainability strategies in place that have been acted upon and clearly communicated. And only a nominal 19% say sustainability metrics are linked to external reporting frameworks.

Our research also revealed a significant “Say-Do” divide between what CEOs say they are doing on environmental issues and what employees see them do.

• While 79% of C-suite leaders say their organizations’ environmental practices are in line with industry best practices, just 54% of employees say the same. 
• While 78% of C-suite leaders say their organizations are doing all they can on climate change, only 53% of employees agree. 
• While 73% of C-suite leaders say that their organizations place the same importance on sustainability as they do on profits, only 48% of employees say the same. 

Notably, employees are more likely to see their organizations carry out “bolt-on” environmental initiatives. In our study, 64% of employees said their organizations were taking action to reduce waste (e.g. recycling, less packaging, reusing materials), while 68% said their organizations were relying on digital technologies to reduce paper use. This indicates that the majority of leaders are ticking boxes with tactical environmental-related actions, rather than viewing sustainability as a fundamental driver of business strategy. As Alan Jope, CEO at Unilever, writes in the foreword to Divides and Dividends, “Sustainable business isn’t a strategic priority. It is our strategy. It is our priority.”⁴

One barrier to holistically integrating sustainability across business strategy is that only a minority of C-suite leaders have carried out additional sustainability-related responsibilities in the past two years—whether that is changing internal processes to improve environmental or social outcomes (29%), identifying new approaches to make their products or workplace more sustainable (28%), changing supplier selection to improve environmental or social outcomes (25%) or completing an academic study or a qualification with an emphasis on environmental or social sustainability (23%). Furthermore, just 28% have received training on environmental or social sustainability issues.

As the climate crisis takes center stage, businesses will have to get their acts together or risk the loss of customers and investors, and the depreciation of equity and reputation. On the upside, leaders who bridge the divides that threaten our global societies will yield significant triple-line dividends. Anjali Bansal, the founder of Avaana Capital, recently told us “Climate change is impacting every single sphere of our life, every single society, every single country. Leaders have a big responsibility to act today to ensure that we leave a healthier planet for the next generation. And through different business models, through innovation-led business models, we have a real opportunity to do that.”

Interestingly, our research indicated significant regional variations in how companies view sustainability priorities. As the current holder of the COP26 Presidency, the UK is among the world’s leaders in its concern for climate change. When we asked survey respondents about the most important sustainability issues affecting the future of our society, 40% of UK C-suite leaders put climate change at the top of the list. The global average was 29%. Conversely, just 17% of C-suite leaders in Canada and 21% of C-suite leaders in Australia cited climate change as a top societal challenge.

To determine how your market or industry fared, we have developed an interactive Divides and Dividends website⁵ to produce customized reports by sector, country, and cohort—including demographic breakdowns—with the extensive data generated by this unprecedented research. The report also enables leaders to address the challenges and grasp this opportunity by providing:

• An understanding of the environmental, social, and economic divides facing businesses, their implications, and action items to address
• Methodologies to strategically advance a sustainability agenda
• A roadmap to delivering lasting value for people, planet, and profit

As the climate crisis takes center stage, businesses will have to get their acts together or risk the loss of customers and investors, and the depreciation of equity and reputation. On the upside, leaders who bridge the divides that threaten our global societies will yield significant triple-line dividends.

This article was originally featured on BRINK.

<sub>1. Introduction - UN Climate Change Conference (COP26) at the SEC – Glasgow 2021 (ukcop26.org)
2. COP26 Goals - UN Climate Change Conference (COP26) at the SEC – Glasgow 2021 (ukcop26.org)
3. COP26-Explained.pdf (ukcop26.org)
4. Divides and Dividends | Russell Reynolds Associates
5. Divides and Dividends | Russell Reynolds Associates Divides and Dividends: Leadership Actions for a More Sustainable Future, surveyed employees, next-generation leaders, and C-suite executives across 11 countries in growth and mature markets. The study examines how the global workforce views, experiences and prioritizes the most important challenges affecting society, businesses and workers.</sub>