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The pivot to a sustainable business model begins not with a mountain of compliance tasks, but with four concrete actions: assessing energy demand, scanning for risks and hidden dependencies, locating innovation opportunities, and starting a data infrastructure overhaul. Even in the face of intensifying stakeholder activism and new regulations, CEOs who stay focused on that simple checklist can catalyze business-wide change, helping to ensure both the company’s future viability and the planet’s.

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Dive deeper: Unlocking the energy-demand opportunity in food and beverage

The global transition to a sustainable economy will open up all sorts of opportunities for investment, innovation, and growth. This is hardly a secret to CEOs: 58% of those polled in PwC’s 27th Annual Global CEO Survey said their company has completed or begun initiatives to innovate climate-friendly products, services, or technologies—in part to support decarbonization, but also to respond to market demand. It’s a smart play: recent PwC analysis shows that climate-related innovation has a positive effect on profit margin, as do a half dozen other climate-related business moves, both individually and when analyzed in aggregate:

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Locate opportunities for innovation

—Atul Gawande, surgeon and writer

Under conditions of complexity, not only are checklists a help, they are required for success.”

Investors, too, see the upside of action on sustainability: 69% of them said they’d increase investment in companies that successfully manage sustainability issues relevant to the business’s performance, according to PwC’s Global Investor Survey 2023. But for many CEOs, those opportunities can look like a city shimmering on a distant hill. Standing in the way is a vast thicket of stakeholder demands and new regulations. Take the EU’s Corporate Sustainability Reporting Directive (CSRD), which will affect some 50,000 companies in the bloc and beyond. Reporting requirements for CSRD compliance identify more than a thousand individual data points for disclosure, covering not just perennial reporting topics, such as climate change, but also some less familiar to many C-suite teams, such as circular resource use and biodiversity. Amid competing urgencies, there’s a risk that businesses will fall into a grinding, inefficient cycle of compliance box-ticking. How can CEOs avoid that trap? By making a bold business case for sustainability, one that’s laser focused on value, growth, and, ultimately, business model reinvention. Sticking to that long-term mission while managing immediate business obligations won’t be easy. That’s why we’ve come up with a checklist. Not one packed with a zillion compliance tasks, but one consisting of four targeted business actions that CEOs can complete to set meaningful change in motion:

If you want to create value with sustainability moves, start by taking a hard look at resource use and energy consumption. This means tackling the so-called energy trilemma: the triple challenge of simultaneously ensuring a reliable energy supply, reducing emissions, and trimming costs. The good news is that changes to the world’s energy systems, and to the markets driving those systems, are putting new options for managing energy demand into play. Consider recent PwC analysis of a large global food and beverage company. By examining publicly available information about its operations, such as its fleet and facilities and its corporate and retail sites, the study determined that the business could recoup roughly 60% of its current energy costs, or about US$300 million, by implementing a broad suite of demand-side changes, including:

Dive deeper: Managing nature risks

Pinpointing nature-risk exposure across a complex supply chain won’t be easy, which makes it crucial to get a panoptic, data-informed view of the company’s sustainability activities. Another potentially hidden risk: climate threats to commodities such as food crops, vital metals, and critical minerals. Climate change is increasing the incidence of heat stress and drought at farms and mines around the world, and even in a low-emissions scenario, those threats are projected to get much worse. For the mining of some critical commodities—bauxite and iron, for example—the threat of heat stress for workers is already considerable:

When PwC’s Global CSRD Survey 2024 asked business leaders to assess the obstacles to implementing the new regulations, one factor ranked above all others: data availability and quality. A lack of granular, auditable data collected in a routinized way from along the company’s value chain makes calculating emissions, energy use, resource depletion, and other impacts much more difficult. It’s a challenge that another PwC study cites as a reason that companies in ten out of 11 economic sectors are not on track to achieve their decarbonization targets. Robust data is also essential for meeting the expectations of investors: 75% of those polled in PwC’s Global Investor Survey 2023 wanted trustworthy information on a company’s environmental and societal impacts; 94% of them didn’t think they were getting it. Better data requires better tools. Yet just 26% of companies participating in PwC’s Global CSRD Survey 2024 have a centralized system for storing and managing sustainability data:

Ron Kinghorn Sustainability Strategy and Operations Leader, Principal, PwC US Email

Renate de Lange Global Sustainability Markets Leader, Partner, PwC Netherlands Email

Will Jackson-Moore Global Sustainability Leader, Partner, PwC UK Email

Image of the top of a group of soda cans

Unlocking the energy-demand opportunity in food and beverage

Aerial view of roads leading into a tunnel with trees around the road

Ten questions for a winning climate-transition business strategy

The energy-demand opportunity: How companies can thrive in the energy transition

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PwC’s Global CSRD Survey 2024

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How climate adaptation can both protect and grow your business

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From trade-offs to payoffs: CEOs on creating value with climate action

Further reading: Go deeper on sustainability and business model change

Amy Cai Sustainability Managing Partner, PwC China Email

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Effective demand-side action can do more than lower energy spending, reduce emissions, and improve reliability of supply. In addition to addressing the trilemma, it can actually lead to new revenue streams. PwC research shows that such demand-side moves fall into four main categories:

CEOs shouldn’t go after the upside without managing the risks. And though chief executives seem to be making good progress on the former (58% of respondents in PwC’s 27th Annual Global CEO Survey said their company has innovated climate-friendly products, services, and technologies, for example), progress on the latter has been slower. Fewer than half of CEOs have initiated or completed plans to incorporate climate risks into financial planning and to protect their company’s physical assets and workforce from climate threats. An even smaller share of CEOs have invested in nature-based climate solutions, a finding that points to a potential blind spot in sustainability plans: nature dependency. A PwC study found that 55% of global GDP, or about US$58 trillion, is moderately or highly dependent on natural ecosystems such as wetlands, forests, oceans, and aquifers. The direct operations of five industries—representing an economic value equivalent to 12% of global GDP—are all highly dependent, meaning disruptions to the ecosystems they rely on could be catastrophic.

October 2024

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Reinventing your business for a sustainable future starts with four mission-critical actions.

Illustrations by Paul Weston

checklist

sustainability

The CEO’s

Zubin Randeria ESG Leader, Partner, PwC UK Email

Kevin O’Connell Sustainability Reporting and Assurance Leader, Partner, PwC US Email

Ivy Kuo Asia-Pacific Sustainability Leader, Partner, PwC China Email

Initiate a data infrastructure overhaul

overhaul

infrastructure

data

Initiate a

The benefits of a data infrastructure overhaul go beyond reporting. That comprehensive view of your company’s sustainability impacts can also yield performance insights, which, in turn, can inform the kinds of strategic business decisions that drive growth.

Most CEOs’ efforts to bring their company’s data capacity up to speed will go beyond a mere upgrade. Leaders will need to create a plan to develop new systems, assurance processes, and team structures. Some companies may be able to augment the systems currently being used for financial data. Others should consider creating a central repository, or data lake, which can serve as a hub that connects data sourcing, management, and reporting activities.

Dive deeper: Data for the sustainable enterprise

Do an energy demand assessment

By the end of the decade, companies worldwide could save US$2 trillion by reducing their energy intensity using currently available technologies.

Source: World Economic Forum, , 2024

Sources: ENCORE database, EXIOBASE, S&P Capital IQ, PwC analysis

More than 50% of the market cap listed on 19 large stock exchanges is exposed to material nature risks.

Scan for risks and hidden dependencies

Source: PwC’s 27th Annual Global CEO Survey

Companies that innovate new climate-friendly products, services, and technologies enjoy a profit margin premium of 4.5 percentage points.

Locate opportunities for innovation

Source: PwC’s Global CSRD Survey 2024

Just a quarter of companies in a recent PwC survey have a centralized storage system for sustainability data.

Initiate a data infrastructure overhaul

Transforming energy demand

assessment

energy demand

Do an

Tapping into that value starts with an assessment of where new technologies and market mechanisms can be deployed across the company. The fact is that many demand-side plays consist of readily achievable changes to infrastructure and operations—comparatively easy wins that make good business sense.

and hidden dependencies

Scan for risks

Indeed, extreme heat, which can lower productivity by making outdoor work unsafe, is a clear and present business threat for many companies. The urgent need to adapt to climate change is altering the way companies assess risk and develop resiliency plans. But it also presents opportunities, prompting businesses to develop solutions—such as hurricane-resistant building materials or novel insurance products—that can help customers adapt to the climate disruptions that are already here and those still to come.

Locate opportunities for innovation

Dive deeper: Ten questions for a winning climate-transition business strategy

It’s almost an article of faith among some business leaders that taking action to reduce a company’s environmental or societal impact entails costly trade-offs. But recent analysis of data from PwC’s 27th Annual Global CEO Survey suggests this isn’t necessarily the case. The research shows that business actions related to climate change actually have a positive effect on financial performance:

Of the seven actions studied, innovating new climate-friendly products, services, and technologies was linked to the highest profit margin premium. That finding aligns with recent research led by George Serafeim, a professor at Harvard Business School. His team studied 3,610 publicly listed companies and found not only that the number of organizations developing climate solutions has grown significantly, and across multiple sectors, but also that businesses introducing climate solutions to their product portfolio enjoy a revenue growth premium of two to three percentage points. It all adds up to a clear CEO priority: as economies transition to a low-carbon future, leaders should look for opportunities to respond to sustainability-driven market shifts. Of course, launching any business venture comes with challenges. Serafeim identifies five that companies should recognize when setting climate-transition strategies: two of these challenges (behaviors and time) relate to the demand for climate solutions and the other three relate to the supply.

Chief executives who meet these challenges—and focus on innovating climate solutions that respond to market demand in a timely way—can realize the growth potential inherent in the shift to a sustainable global economy.

Portrait by Noli Novak

—George Serafeim, professor at Harvard Business School

The transition to a low-carbon economy is a monumental undertaking for society—and for companies. As this transition progresses, businesses will find immense opportunity to develop and deploy new products and services that meet customers’ needs and improve their lives.”

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In conclusion

demand

risks

2 min

In brief

demand

data

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demand

data

risks

8 min

In depth

demand

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risks

demand

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risks

demand

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