“Companies around the world report an alignment between corporate strategies and sustainability priorities as they seek to build resilient, future-ready businesses,” Jessica Alsford, Chief Sustainability Officer and Chair of the Institute for Sustainable Investing at Morgan Stanley said in a press release about their new research.
The dramatically changing climate is both a threat and an opportunity to a large majority of global companies, this study found, Over 57% of the companies surveyed said their operations have been affected by extreme weather events over the last year, with 73% of Asia Pacific region companies reported having been affected.
What’s more, “Over the next five years, more than two-thirds believe that physical and transition risks from climate could impact demand, costs, investment needs and relationships with investors, with these concerns notably highest in North America,” according to the study.
Morgan Stanley, screenshot
There are various ways climate-related events have affected their operation, this study found, including: (a) 54% said it increased costs; (b) 40% said it caused “worker disruption”; and (c) 39% said it caused losses in revenue.
In addition, Morgan Stanley reported that over “the next five years, more than two-thirds of all respondents see further negative impacts from climate risks.”
Regardless of what happens in Washington, DC, the private sector is moving forward with climate resilience planning, both to reduce risks to business disruption, and to seize the competitive market opportunities that come with it.
A driver of ground-breaking innovation
The Morgan Stanley study found that 80% of companies feel either “very prepared” or “somewhat prepared” for the impact of climate-related events.
Constraints are one of the key drivers of innovation, so it follows that strategies to reduce an organization’s environmental impact and increase their resilience would provide fodder for creative minds in the companies to develop new products from what was previously considered “waste,” or to reduce costs and increase business stability by increasing their use of renewable energy technologies.
Morgan Stanley, screenshot
The dozens of companies gearing up for Climate Week 2025 next month in New York City, during the United Nations General Assembly, know this too.
Dell has been tackling these issues for years and even is launching a sustainable computer, for example. Deloitte has found that looking through a sustainability-climate resilience lens helps spotlight business value. The over 400 leaders and innovators I’ve talked to on Electric Ladies Podcast all tell stories of how SWOT analyses – strengths, weaknesses, opportunities and threats – that include increasing resilience to climate-related events and reducing their environmental impact reveal significant untapped business value.
The Morgan Stanley study found that 80% of companies feel either “very prepared” or “somewhat prepared” for the impact of climate-related events.
Morgan Stanley, screenshot
Exceeding progress, despite barriers
Companies reported that sustainability-related practices are driving profitability, and 65% said they are “meeting” or “exceeding” their performance expectations for these strategies.
Technologies are key enablers (33%), including of course artificial intelligence (A.I.), and market demand, even in North America (30%), the study reported.
Key constraints are, according to this study, “The high level of investment required and political and macroeconomic uncertainties.”
Deloitte
Europeans report higher concerns about regulations increasing costs, though as Kristen Sullivan, Deloitte’s head of their Sustainability Services practice pointed out, doing the work to meet those regulations and reporting requirements can unlock business value too.
However, North American companies are significantly more concerned about the potential impact of climate-related events on their business performance, 6 to 17% higher. The potential impacts these companies are focused include loss of revenue from the resulting business or supply chain interruptions (75% in North America vs. 58% in Europe and 59% in APAC), and from workforce disruptions (69% in North America vs. 56% in Europe and 63% in APAC).
Key to driving innovation: talent and culture
Telle Whitney
Telle Whitney, a veteran of esteemed Silicon Valley companies including start-ups, cofounder of AnitaB.org, the largest organization of women in technology in the world, and cofounder of its popular Grace Hopper Conference that attracts tens of thousands each year, just penned the book “Rebooting Culture: How to Ignite Innovation and Build Organizations Where Everyone Can Thrive,” about what drives innovation in both big companies and small ones. She says the keys are culture and talent.
As she told me recently on Electric Ladies Podcast, “Talking to people from different disciplines pushes your thinking about your assumptions, going out and listening to what other people are doing helps inform the way that you creatively solve the problem that’s in front of you.”
“Leaders often are scared by some of these ideas that are coming out of their workforce and that’s why they’re shutting them down. But if you can demonstrate yourself to be receptive to ideas, then you can help guide a creative future,” she added.
Whitney says innovation must be an intentional, concerted effort that organizations actively adopt.
The 88% of global companies in this study that see sustainability and climate resilience as important drivers of business value understand that massive innovation is key and are recruiting the talent they need to do so, no matter where they come from or who they are.
Telle Whitney
Source: forbes.com
