Released today, Deloitte's 2023 CxO Sustainability Report: Accelerating the Green Transition finds global C-level business leaders (or CxOs) view climate change as a top priority for their organizations amid global uncertainty. When asked to rank the issues most pressing to their organizations, many CxOs rated climate change as a "top three issue," ahead of seven others, including innovation, competition for talent, and supply chain challenges. In fact, only economic outlook ranked slightly higher. Moreover, 75% of CxOs said their organizations have increased their sustainability investments over the past year, nearly 20% of whom said they've increased investments "significantly."

Deloitte built upon past research by surveying more than 2,000 CxOs across 24 countries to gauge concerns and actions from business leaders on climate change and sustainability. The report also identifies key recommendations for organizations to help close the gap between ambition and impact in order to accelerate progress to a low-carbon economy.

"If there was any doubt that climate change is an enduring part of the business agenda, the increased focus on sustainability by leaders over the past year should put it to rest. In a year of continued uncertainty, disruption, and competing business challenges, leaders ranked climate change as a top issue," says Deloitte Global CEO Joe Ucuzoglu. "The path to a more sustainable future will take time, it will require businesses investment, and it will be driven by new and innovative technologies, and creative approaches. It is promising to see that C-suite leaders are making sustainability a priority and increasing their investments to help lead the way."

Optimism endures despite heightened concern around climate impact

Almost every CxO surveyed said their organization has felt the impacts of climate change over the past year. CxOs reported "resource scarcity/cost of resources" as the top issue already impacting their companies (46%), while 45% highlighted "changing consumption patterns or preferences related to climate change" and 43% reported "regulation of emissions" as other top issues impacting their companies. Additionally, around a third of executives said climate change is negatively affecting their employees' physical (37%) and mental (32%) health.

In addition to the impact on their businesses and stakeholders, 82% of executives said they have been personally impacted by climate events over the past year, with extreme heat the most frequently cited issue, and 62% said they feel concerned or worried about climate change all or most of the time.

Despite these concerns, 78% of leaders are "somewhat" or "extremely" optimistic the world will take sufficient steps to avoid the worst effects of climate change, and 84% agreed/strongly agreed that global economic growth can be achieved while also reaching climate change goals.

"Our survey tells us that CxOs believe that both their organizations and the global economy can continue to grow while reaching climate goals and reducing greenhouse gas emissions," says Jennifer Steinmann, Deloitte Global Sustainability & Climate Practice Leader. "Leaders should also harness their optimism to drive sustained, measurable impact, which will require ramping up climate adaptation efforts while also facilitating innovation that ensures a just transition for all stakeholders."  

Meeting increased stakeholder demands

Deloitte's survey finds that organizations are feeling broad pressure to act on climate change from across their stakeholder groups. Sixty-eight percent of CxOs said they feel a large-to-moderate degree of pressure from each of the following groups: board members and management, regulators and government, and consumers and clients. Organizations are also feeling pressure from their shareholders and investors (66%), employees (64%), and civil society (64%).

Employee activism is specifically driving increased action, with more than half of CxOs saying employee pressure on climate matters led their organizations to increase sustainability actions over the last year; 24% said employee activism led to a "significant" increase. Regulation is also influential: 65% of CxOs said the changing regulatory environment led their organizations to increase climate action over the last year.

In line with last year's report, CxOs chose brand recognition and reputation, customer satisfaction, and employee morale and well-being as three of the four top benefits of their companies' sustainability efforts, suggesting many CxOs see climate actions as a way to strengthen stakeholder relationships. The lowest-ranked benefits (all financial) suggest CxOs continue to struggle to define the longer-term financial opportunities that sustainability measures offer.