Key Impact Points:
- Half of global CEOs doubt their ability to meet 2030 net zero goals, according to KPMG’s annual CEO survey.
- Complex supply chain decarbonization and data analysis technology are the main barriers.
- Business leaders adapt their language and strategies in response to evolving ESG expectations and challenges.
Half of the world’s chief executives are uncertain about their companies’ ability to meet ambitious 2030 net zero targets, a significant finding from KPMG’s annual CEO survey. The survey, which gathered insights from 1,325 business leaders across 11 key markets, reveals a cautious outlook among top executives regarding their environmental strategies and goals.
Decarbonization Challenges and Competitive Pressures
The complexity of decarbonizing supply chains was highlighted as the primary challenge by 30% of the CEOs, with 16% citing a lack of appropriate technology for data gathering and analysis as a significant hurdle. Despite these obstacles, CEOs recognize the competitive disadvantages of failing to meet environmental, social, and governance (ESG) expectations. Nearly a quarter (24%) expressed concern that falling behind on ESG could give competitors an edge, with others worried about impacts on their leadership tenure (21%) and recruitment (16%).
Proactive Measures and Strategic Shifts
In response to these risks, 76% of CEOs indicated a willingness to divest profitable business parts that harm their reputation. Furthermore, 68% stated they would take a stance on politically or socially contentious issues, even if it raised concerns at the board level. However, two-thirds of CEOs (66%) admitted they aren’t prepared to handle the potential scrutiny and expectations from shareholders regarding ESG matters.
Adaptation in Communication
The survey also uncovered a significant shift in how companies communicate their ESG policies. Amidst backlash, 69% of CEOs said they had altered the language used to discuss ESG, moving away from the broad acronym to focus more specifically on actionable issues like decarbonization, net zero goals, and social measures. This shift, up from 36% in 2023, suggests a trend towards more precise and actionable ESG discussions.
Richard Andrews, head of ESG at KPMG UK, notes, “We are not seeing a dampening of activity, but a move away from simply badging it all together as ESG.” He anticipates more focused discussions on practical issues rather than overarching ESG terminology.
Reflecting on the Future of ESG
As the deadline for the 2030 targets approaches, global CEOs are recalibrating their strategies to better align with evolving market expectations and regulatory landscapes. This strategic shift is accompanied by a broader reconsideration of how sustainability is integrated into core business practices, indicating that while the journey towards sustainability is fraught with challenges, it also offers substantial opportunities for innovation and leadership in a rapidly changing world.
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