Organisations seek new ways to cope with record temperatures and extreme weather as the numerous climate crises continuously become industry disruptors.
According to PricewaterhouseCoopers International, relatively few companies recognise what it really means to do business in a way that minimises environmental harm, let alone how the transition may unlock enormous growth opportunities.
It is then imperative for finance leaders to view climate change not just as an operational threat, taking this perspective to generate internal momentum for a strategic response. This allows leaders to drive the necessary organisational shifts and investments to safeguard at-risk operations and gain powerful competitive advantages.
For this matter, CFOs can ensure key finance activities of the organisation include relevant indicators of sustainability performance, along with guidelines for how to balance these with other considerations.
PwC listed a few of the actions leaders must look into as they approach climate crises and the underlying opportunities:
- Reimagine the future. Leaders can’t respond to every operational threat or market shift resulting from climate change and other environmental pressures, such as nature loss. Understanding how the long-term financial outlook may change under different scenarios will help leaders prioritise reinvention efforts with the most potential to create value.
- Build climate resilience, but grab quick wins. Nearly every company taking a careful look at its use of energy and other resources finds ways to reduce costs and cut carbon emissions. It should also be noted that government incentives for energy efficiency or emissions reduction projects are present. Another crucial move to create value is building climate resilience. After being caught off guard by this year’s record-high temperatures, executives need detailed plans to maintain operations in extreme conditions.
- Develop leadership savvy. Long-term financial success depends on the ability to manage key aspects of non-financial performance: think of R&D productivity in pharma and tech, supply-chain efficiency in manufacturing, or customer conversion in retail. All of these are enabled not just by their direct function but by other functions across the business. Yet relatively few functional leaders have the know-how to manage sustainability factors well.
