The Cervest 2021 Climate Intelligence Outlook: climate crisis causing seismic shift in business priorities

This September, we surveyed more than 800 business decision-makers across the US and the UK for the first Cervest Climate Intelligence Outlook. We wanted to understand how climate risk has impacted businesses and how they are preparing for upcoming regulatory climate risk disclosure (which we will share in a second report). We found the vast majority of businesses have already been impacted by climate volatility and recognize its bottom line impacts, yet less than half have a plan in place to bring climate change into their decision making. Companies are confident in their ability to manage climate-related risk, yet many say they need more resources and better insights in order to succeed.

The net-net: there is a clear need for companies to become climate intelligent — as quickly as possible — to balance awareness and readiness with risks and opportunities.

The report’s findings are summarized in the press release below. Read the full Climate Intelligence Outlook report here.

Survey of US and UK business decision-makers shows climate volatility is impacting physical assets & the bottom line for nearly 9-in-10 organizations, yet their focus is on decarbonization, not resiliency.

LONDON & SAN FRANCISCO – October 19, 2021 – Eighty-three percent of decision-makers at large businesses in the US and UK believe climate volatility poses a tangible risk to their corporate bottom line. Additionally, almost half place a greater emphasis on mitigating or managing climate risk than on imperatives like revenue growth, digital transformation, and profitability. However, there is a wide gap between organizations’ awareness of climate-related risk and their readiness to mitigate its impact, even as extreme weather activity threatens more and more of their assets.

These are key findings from the Cervest 2021 Climate Intelligence Outlook, published today. Based on findings from more than 800 senior executives responsible for climate-related strategies in the US and UK, the survey further highlights that despite the bottom line implications of climate risk, and a whopping 87% of respondents believing their organization understands the financial risks that climate change poses, nearly half (47%) of organizations have yet to integrate climate into their financial risk management. A similar proportion of respondents state their organizations are not actively assessing and managing relevant physical climate risks. In addition, over a third (36%) believe their company has not allocated enough resources — including budget and people — to effectively manage the risks and opportunities of climate change.

The Outlook highlights the two key climate-related challenges enterprises must address at once: decarbonization and physical risk. The vast majority of executives (80%) admit they are heavily focused on achieving net zero carbon emissions over adapting to physical climate risks. By contrast, just over a third (37%) agreed their organization plans to adapt to climate change by modifying physical assets or processes for future climate scenarios.

“Decarbonization is critical, but it’s not enough to protect organizations and investors against the risks of climate change,” said Iggy Bassi, Founder and CEO of Cervest. “Decades of greenhouse gas emissions have locked us into decades of accelerating climate volatility which translates into trillions of dollars of assets at risk. Even if we were to reach net zero tomorrow, it would not reverse the persistence and intensification of today’s extreme weather events. Organizations need to understand how to adapt with climate change and build resilience into their strategy.”

Conducted in September, following Hurricane Ida, the California Wildfires, and the flooding and droughts across the UK and Europe, the Cervest Climate Intelligence Outlook finds the impact of climate-related risks on corporate physical assets may be more significant and broader in scope than previously forecasted.

Last year, S&P Global reported that 60% of companies in the S&P 500 Index owned physical assets at high risk exposure from climate-related events. But the Cervest survey finds 88% of companies have already had a corporate physical asset, such as an office, warehouse, or other building, affected by extreme weather. Flooding (61%) topped the list of climate hazards that executives say pose the most significant risk to assets, followed by extreme precipitation (59%), heat stress (46%), wind stress (40%), and drought (33%).

“Businesses are becoming increasingly aware of the complex transitional and physical risks posed by climate volatility,” added Bassi. “Our survey results clearly bear that out. However, despite their best intentions, decision-makers across organizations are struggling to factor climate change into their decision-making. All internal and external stakeholders need to see the projected impact of climate change on the same physical assets. When this happens, we will create a network of climate intelligent organizations driving transformative change at a global level.”

In an effort to take that next step, 56% of respondents believe software leading to actionable insights would enable their organization to quantify and manage climate risk more accurately. In addition, nearly half (48%) of businesses reported using in-house data and analytics to develop insights, and 38% stated they receive bespoke data and analytics from consultancies.

Share whether your organization has been affected by extreme weather events, and how you’re factoring climate adaption into business critical decisions with us on LinkedIn or Twitter. Alternatively, want to stay up to date with Cervest’s latest news? Sign up to our newsletter at the bottom of this page.