Romania is most likely to be ahead of its CESA peers in taking up various actions to address its climate change agenda across multiple domains, especially actions related to suppliers and third parties through partnerships, mergers and acquisitions, and divestments, according to the EY CESA Sustainable Value Study, a study which draws on insights from a global survey of 52 Chief Sustainability Officers (CSOs) in Romania.

Poland has the shortest timeline for becoming carbon-negative and Romania has the shortest timeline for reducing emissions and the lowest reduction target to achieve net zero. Investment in climate change initiatives varies for each CESA country, with different factors driving their decisions. Poland is more likely to prioritize customer value, while Romania’s climate change agenda is driven by employee and planetary values.

Romania has found it easier to measure progress on its climate change agenda compared to handling other major business incentives, unlike other CESA countries; however, Romania still needs to improve collaboration across leadership and senior management on the climate change agenda.

Companies are reducing emissions, but too slowly and not enough

About 92% of companies surveyed have made a public climate change commitment. On average, they plan to reduce emissions with 33%, but so far they have reduced emissions with 19%. The world needs a 45% reduction by 2030 to keep 1.5°C on track. Most commitments fall short – only 27% plan to reduce emissions with 45% or more and only 38% have a commitment by 2030.

Companies’ climate investments are turning into financial value. Four in ten have achieved higher than expected financial value. The trade-off between delivering on planetary goals or meeting business objectives is often a false choice. A holistic approach to sustainability that includes the financial, employee, and customer benefits, tends to deliver more value to the planet.

Organizations taking fewer actions struggle more with execution, while organizations leading on action need to improve coordination and internal collaboration. Key opportunities to make significant headway on climate change include broader partnerships and investing in talent.

Six in ten companies plan to spend more money next year to address climate change compared to this year, with a quarter planning to spend significantly more. Value creation is a key consideration, with almost all (99%) of organizations considering more than one type of value when evaluating an initiative.

Only 29% of the respondents have committed to carbon negative and 15% have committed to net zero. Most companies are falling short of a 45% reduction by 2030 to keep 1.5°C on track (as mapped out in the Paris Agreement): 38% have a commitment by 2030 and only 27% plan to reduce emissions 45% or more (at any point).

A Value-Led Sustainability approach is driving financial impacts

Companies’ climate change investments are delivering more value than expected across multiple dimensions. This is despite concerns climate change initiatives will negatively impact financial performance (37%) or reduce their ability to compete in the market in the near-term (19%). On average, respondents say 2.8 times as many of their organization’s climate initiatives will have a positive financial impact than a negative one (39% vs 14%).

Companies are 0.5 times more likely to prioritize financial value than planetary value as the number one consideration when evaluating an initiative. Considering the impact of climate initiatives across multiple types of value can benefit businesses, society and the planet. Long-term sustainability planning makes it easier for companies to stay the course or find new opportunities to create value.

“Our survey reveals that companies leading on climate action are capturing more value and are more likely to report significantly higher financial value than expected. According to the survey, taking action to reduce emissions and investing in initiatives that address climate change can accelerate financial performance. This is a strong message for those organizations which are still hesitant about taking decisive action to reduce their greenhouse gas emissions and prevent the potential consequences of climate change on their business.

”Understanding and addressing emerging regulatory requirements and customer expectations as well as optimizing operating costs through energy and resource efficiency, waste minimization, and product reformulation, unlock new market opportunities and increase sales and revenues, ultimately leading to better financial performance. This survey confirms that climate action is not just a question of proper risk management, but it is also, and maybe even more importantly, a business opportunity that creates value in the medium and long term and enhance a company’s resilience,” said Massimo Bettanin, EY Romania Climate Change and Sustainability Services Partner.

Photo by Guillaume de Germain on Unsplash