The vast majority of institutional investors, as well as CEOs, today agree that special attention and urgent action is required to combat climate change. More than 2,500 companies around the world have set a goal to reduce their environmental impact in the coming years, and fund managers have invested $59 trillion. dollars in assets based on a commitment to achieve a zero carbon footprint.

However, according to PwC’s recent 2022 Global Investor Survey, CEOs are more reluctant than investors to plan and take action to address climate change. This means that the benefits for executives and their businesses can be significant if they ultimately align their strategy with investors’ priorities.

In particular, 44% of investors believe that companies should aim to reduce greenhouse gas emissions. To do this, they need to take initiatives to reduce emissions and develop new products and processes that are environmentally friendly, while at the same time they need to adapt their broader strategy in this direction.

In contrast, executives are seeing much slower progress on significant climate change and emissions reductions, responding to only 1/3 of investor demands.

An important role in the gap between the two sides is played by a number of exogenous factors, such as inflation and macroeconomic uncertainty, which are now seen as more immediate threats to business. In any case, however, such a large gap between the two approaches should prompt executives and company leaders to rethink their strategy to meet investor expectations. To achieve this, they can go in several directions.

Executives are more reluctant than investors to plan to tackle climate change.

The first is to calculate the economic benefits that climate change action can bring. According to our survey, 1/3 of the executives surveyed believe that switching to new energy sources will affect the profitability of their industry. A perception that investors agree with, given that the impact on company profitability in the next decade will be very large.

The second way is to show financial discipline. This means that they must realistically and in detail describe the economic impact of the initiatives they undertake in relation to the environment, while remaining true to their original intent, offering investors reliable information. Directly related to the above is investor demand for more transparency in corporate sustainability reports. For their part, businesses are encouraged to improve the quality and content of their reports. At a time when nearly 9 out of 10 investors believe that corporate sustainability reports contain even a hint of greenwashing, there is an urgent need to change this negative image through transparency, meaningful reporting and realistic metrics.

In conclusion, companies that take constructive climate change initiatives and communicate them effectively and transparently to investors will enjoy better, faster and greater access to capital markets. Justifying in this way both the costs and the effort needed to achieve the appropriate transformation.

Mr. Dimitris Sakipis is the Head of ESG at PwC Greece.