Exposure to climate change risk is the fastest growing threat to businesses, say EU CEOs in a survey report by PwC. Nearly a quarter (24 percent) of EU CEOs believe their companies will be highly or extremely exposed to the impact of climate change on a five-year outlook - with a certain or high probability of significant financial loss. This compares to 14 percent on a one-year outlook.
Just 16 percent of EU CEOs said they will be only minimally exposed to the impact of climate change over the next five years.
While the threat of climate change is rising significantly, exposure to other threats including inflation, macroeconomic volatility and geopolitical conflict risk are falling. As a result, climate change (24 percent) now ranks alongside macroeconomic risk (29 percent), geopolitical conflict (30 percent), inflation (30 percent) and cyber security risks (28 percent) as the key concerns facing the most senior business leaders over a five-year time horizon.
In response to the growing threat from climate change, EU CEOs have stepped up their efforts to mitigate the impact on their businesses and are now leading the way globally, with 75 percent implementing initiatives to reduce their company's emissions compared to just 59 percent in the US and 70 percent in APAC. In addition, 71 percent of EU CEOs are introducing new climate-friendly products or processes, compared to just 50 percent in the US and 65 percent in APAC.
Andrew McDowell, Strategy & Partner, PwC Luxembourg, said: "Our survey shows that CEOs are increasingly aware of the threat that climate change risk poses to 'business as usual.' Climate change has joined the other major threats that CEOs need to address on an ongoing basis and so they are taking decisive steps to mitigate the impact by refocusing their priorities for action and investment. EU CEOs clearly recognise the scale of the challenge that lies ahead which is a really positive step forward and a reassuring sign that EU businesses are in good hands."
Nearly two in five EU CEOs support the need for radical change in their businesses, saying that their businesses won't be viable in ten years if they continue on their current path. More than half (57 percent) are concerned about labour and skills shortages, saying they will impact the profitability of their businesses to a large or very large extent over the next ten years. As a result 70 percent of EU CEOs are investing in upskilling their company's workforce over the coming year.
PwC surveyed 1,254 CEOs in 20 EU member states in October and November of 2022. CEOs based in Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovenia, Spain and Sweden were surveyed.