Achieving High Performance in an Era of Climate Change

Just as climate change is transforming parts of our planet, so it is transforming the context and presumptions by which businesses typically operate. This study presents the research findings of a survey of over 500 business executives from around the world and explores the actions that businesses are taking in response to climate change, business views on the future regulatory environment and the steps businesses can take to achieve high performance in a carbon-constrained world.

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Climate change is rapidly altering the dynamics of markets, competition and profitability. To understand this new context better, Accenture commissioned a survey of over 500 business leaders from China, Germany, India, Japan, the United Kingdom and the United States. Each company interviewed had revenues of at least US$50 million and the sample included both local and global companies from across a broad range of industry sectors.

Business executives around the globe increasingly see climate change as a major issue they must address if they are to achieve and sustain high performance in the future.

• Forty-five percent of respondents said that climate change was currently a major issue for their business, rising to 59 percent who believe it will be a major issue within five years.
  
  
• However, only 5 percent of businesses named climate change as their top strategic priority and just 11 percent stated that climate change figures as their second or third strategic priority.
  
  
• About two-thirds of all respondents stated that they feel a responsibility to help manage the impact of climate change, but only 42 percent said they actually feel well positioned to do so.
  
  
• The most frequently mentioned climate-change-related activities were deploying technologies to improve energy efficiency (named by 53 percent of respondents), measuring carbon footprints (39 percent) or increasing the use of renewable energy (32 percent).
  
  
• Climate change ranked as only the eighth strategic priority for businesses, lagging behind sales growth (47 percent), cost reduction (46 percent), developing new products and services (45 percent), the war for talent (39 percent), growth in emerging markets (29 percent), innovation (28 percent) and technology (18 percent).

It is the indirect impacts of climate change that will have the greatest influence over future business strategy. In particular, the impact of climate change on businesses is being mediated through an increasingly powerful group of stakeholders:

• Government—The most important stakeholder in terms of the business response to climate change, government policies and regulations have the potential to radically alter market incentives and opportunities for profit.
  
  
• Consumers—Environmental responsibility is fast becoming an important factor in a buyer’s decision to purchase a particular product or service.
  
  
• Shareholders—Investor decisions about the allocation of capital are also increasingly informed by environmental considerations.
  
  
• Employees—A company's environmental performance and strategies are also influencing its ability to recruit and retain talent.

In order to be well positioned to achieve high performance in a carbon-constrained world, businesses need to start taking a number of steps:

• Market focus and position—Businesses need to understand the views and influence of the stakeholders shaping the climate-change agenda as well as assess how "green" products and services can be used to tap into new consumer markets.
  
  
• Distinctive capabilities—Businesses need to explore the extent to which reworking their supply chain can deliver cost savings as well as reduce their impact on the environment. Using smart technologies (such as green data centers, which use less energy) will also enable them to deliver more efficient services that strengthen their environmental reputation.
  
  
• Performance anatomy—Businesses need to create a culture of carbon-consciousness which can underpin and strengthen new processes and activities.