In brief

Grasping the opportunity

Reducing risk, increasing reward

divided workforce

As every year makes the urgency of the climate crisis clearer, many organizations are seeking new ways to cope with record temperatures and extreme weather. Yet relatively few recognize what it really means to do business in a way that minimizes environmental harm—and how the transition may unlock enormous growth opportunities. The key? View climate change not just as an operational threat but, more immediately, as a force disrupting entire industries. Taking this perspective helps generate internal momentum for a strategic response, allowing leaders to drive the organizational shifts and investments necessary to not only safeguard at-risk operations but also gain powerful competitive advantages.

In depth

Further reading

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Taking climate change seriously is not just a matter of adapting to the physical threats posed by extreme weather, or even reducing or offsetting carbon emissions. It demands rethinking what your organization does—and how it does it. That’s because the shift to a sustainable economy will cause some industries to shrink, others to expand, and still more to change profoundly (as in mining, where companies are racing to secure critical-minerals assets). The good news for businesses is these changes can open up all sorts of exciting prospects. Consider that for the world to reach net zero by 2050, trillions of dollars will have to be spent on the energy transition, including carbon-light equipment, materials, buildings, and infrastructure. Enterprises getting ahead of these trends by transforming their portfolios and operating models stand to reap major gains.

Reimagine the future. You can’t respond to every operational threat or market shift resulting from climate change and other environmental pressures, such as nature loss. But which dynamics could affect your company’s value most? Consider a car manufacturer: in high-emissions scenarios, sales of gas-powered vehicles may remain relatively stable, but severe temperature increases would heighten climate hazards, raising supply costs and disrupting operations. By contrast, in low-emissions scenarios, carmakers may see swelling demand for electric vehicles and shared-mobility services, along with fewer operational threats from global warming. Understanding how the long-term financial outlook may change under different scenarios will help you prioritize reinvention efforts with the most potential to create value.

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Further reading: Go deeper on sustainable business transformation

More issues

Global concern about climate change is reaching emergency levels. Yet no less pressing is the need for leaders to make aggressive strategic moves to capture opportunities as the world mobilizes to stop global warming and adapt to its effects. Industry disruption is inevitable and calls for the kind of considered but forceful actions demanded by any seismic shift in the business landscape.

In conclusion

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November 2023

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Uniting a

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How climate adaptation can both protect and grow your business

State of Climate Tech 2023: How can the world reverse the fall in climate tech investment?

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Dive deeper: How climate adaptation can both protect and grow your business

Jon Chadwick Energy Transition, Partner, PwC Australia Email

Wendy van Tol Sustainability Transformation, Partner, PwC Netherlands Email

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

Nadja Picard Global Reporting Leader, Partner, PwC Germany Email

Dive deeper: Bridging the gaps: Setting the stage for an orderly energy-system transition

Portrait by Noli Novak

—Johan Rockström, director of the Potsdam Institute for Climate Impact Research

Ecological sustainability is moving away from being something that you do just to have a little green label, to increasingly [putting] your whole value chain in a much more competitive, robust, and resilient positioning.”

Choose your role carefully

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Facing the

Dive deeper: How can business overcome the sustainability stalemate?

It’s already reshaping business. Get focused.

Climate: The ultimate industry

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future

Grasping the opportunity

reward

Reducing risk, increasing

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Bridging the gaps: Setting the stage for an orderly energy-system transition

The CSRD is resetting the value-creation agenda

A strategic imperative

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disruptor

Estimated global cost of extreme weather attributed to climate change from 2000 to 2019

Note: This is a work derived by PwC from IEA material and PwC is solely liable and responsible for this derived work. The derived work is not endorsed by the IEA in any manner.

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 (and don’t forget government incentives for energy efficiency or emissions reduction projects). 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 for maintaining operations in extreme conditions. For example, a mine operator anticipating rising temperatures at a key site would prioritize cooling efforts to keep workers safe.

Develop leadership savvy. Long-term financial success depends on the ability to manage key aspects of nonfinancial 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. There are two especially important roles:

CFOs can ensure key finance activities include relevant indicators of sustainability performance, along with guidelines for how to balance these with other considerations. This role will only become more important as the European Union’s far-reaching Corporate Sustainability Reporting Directive (CSRD) mandates more extensive disclosures.

Accurate, timely information is the lifeblood of effective management. To help executives fuse climate considerations with strategy, CIOs can extend their digital-transformation mandate to develop systems for collecting sustainability data and embedding it into decision-making processes. And this doesn’t have to be a chore: the necessary tools can often piggyback on existing platforms, such as enterprise resource planning (ERP).

Emma Cox Global Climate Leader, Partner, PwC UK Email

It’s not as if those preparing to gather in Dubai for the 2023 UN Climate Change Conference—better known as COP28—need a reminder of the urgency to take climate action. But the planet is providing it anyway: the warmest June on record gave way to the warmest July; the warmest August preceded a record September. And globally we’re on track for the hottest year since records began. For corporate leaders who often view climate change with less urgency than investors, this year’s record temperatures have made it painfully obvious global warming causes serious disruption to business.

It’s a pivotal moment to reframe the challenge. Many of the corporate leaders about to gather in Dubai for COP28 currently view climate change with less urgency than investors. This year’s record temperatures may serve to sharpen their focus on the issue, revealing how much stress it can place on a company—and what might be required to adapt.

Dive deeper: How climate adaptation can both protect and grow your business

Decline

Explore the podcast series from strategy+business, which convenes a global community of solvers to tackle the world’s most important problems

Want to hear more?

EXPLORE

Check out The Leadership Agenda for more sharp, actionable insights from PwC curated to help global leaders build trust and deliver sustained outcomes

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EXPLORE

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In conclusion

In brief | The opportunity | Three actions | Top

4 min

In depth

In brief | The opportunity | Three actions | Top

1 min