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Global skillset shortage threatens progress with US$1 trillion climate problem

  • Global
  • United Kingdom

    13-11-2020

    Eversheds Sutherland & KPMG International survey reveals global businesses are concerned they lack the critical skills required to tackle climate change and jobs threat owed to climate-related risks

    Global businesses are facing an era of unprecedented disruption and transformation as a direct result of climate change. The financial cost of climate change risk, estimated to be upwards of US$1 trillion, poses a significant threat to businesses. A joint survey of more than 500 directors and C-suite executives from the world’s leading companies, conducted by global legal practice, Eversheds Sutherland, and global professional services organization, KPMG, revealed that company boards and management recognize the need to upskill to confront climate-related risks. 

    74 percent of senior decision makers who responded to the survey in August 2020 agreed their company’s management must improve its skillset to deal with climate-related risks, and that failure to do so could pose a threat to jobs; the survey revealed that 78 percent of executives surveyed think climate risk is a key factor in whether they will retain their job over the next five years.

    The survey’s key findings feature other significant human and cultural elements to climate risk within organizations:

    • One quarter of respondents work for companies that offer remuneration incentives for directors to achieve decarbonization targets
    • There is a significant push from below, with 40 percent of respondents identifying that employees are leaving roles because they are unhappy about their employer’s climate impact
    • One third of respondents indicated that employees have actively expressed dissatisfaction with their employer’s climate impact
    • 14 percent of respondents indicated it is more difficult recruiting young people because of their views on the company’s climate impact.

    The report detailing the survey’s findings, Climate change and corporate value: What companies really think, was announced on Wednesday, 11 November at the Green Horizon Summit, a virtual conference held in place of the 2020 United Nations Climate Change Conference, COP26, which is now due to be held in 2021.

    Dr. Mark Carney, United Nations Special Envoy for Climate Action Finance and Trustee of the World Economic Forum, and former Governor of the Bank of England, notes within the report’s Foreword:

    “I would urge company boards to have a robust conversation around the risks and opportunities that climate change poses to their business; seek out this available help; and act early to mitigate climate change risks and turn them into commercial opportunities. Their focus will help break the tragedy of the horizon, creating sustainable business models that society is increasingly demanding and which future generations deserve.”

    “Climate risk is a trillion-dollar problem that companies must face up to. It is not only about the physical impacts of climate change but also the transitional risk of failing to decarbonize sustainably and consequentially losing key stakeholders such as investors and customers,” as Michelle T. Davies, International Head of Clean Energy & Sustainability at Eversheds Sutherland, comments. “The survey demonstrates a significant skills gap: three quarters of executives think climate risk poses a threat to their job while only 26 percent said they have the skillset to deal with the risk. Companies need to upskill their staff and implement strategic plans that begin to mitigate climate risks, which can be reported on. As well as helping companies navigate the myriad of complex regulation, the legal sector can help companies to create and implement these plans, and in doing so help them to transition and importantly improve their bottom line.”

    “Because of the recognition of climate risk across the corporate landscape, there is now much greater focus on decarbonization, and, consequently, companies need to develop a solutions mentality to develop sustainable business models. This will require upskilling boards, management and staff in areas such as corporate PPAs, energy efficiency and the circular economy,” says Mike Hayes, Global Head of Renewables for KPMG International and Global Head of Climate Change & Decarbonization for KPMG IMPACT. “Also a whole new financing environment centred on green bonds and other similar products has emerged to provide the necessary liquidity.”

    NOTES TO EDITORS:

    Methodology

    The research in this report was carried out on behalf of Eversheds Sutherland and KPMG International Limited by the independent research agency Explain the Market Ltd. Directors and C-Suite executives from 509 of the world’s leading companies were interviewed via an online survey in August 2020. The survey included leaders from four key markets (Asia, Europe, United Kingdom and United States) and nine key industry sectors (automotive; consumer and retail; energy and natural resources; financial services; healthcare and life sciences; infrastructure and real estate; industrial manufacturing; technology, media, and telecommunications; and transport, travel and leisure).

    All research was carried out in accordance with MRS and ESOMAR codes of conduct. In addition to the survey, individual in-depth interviews were carried out with nine of the most prominent thought leaders in the areas of climate risk and sustainability.

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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