The vast majority of large companies across the world have been increasing sustainability-related investments over the past year, as C-suite executives have become more concerned about the impact of climate change on their companies, while simultaneously also become more focused on the direct business benefits and opportunities presented by their climate and sustainability initiatives, according to a new survey released by global professional services firm Deloitte.

For the study, Deloitte’s 2024 CxO Sustainability Report, Deloitte and market research firm KS&R surveyed more than 2,100 C-level executives in 27 countries, across a broad range of industries and enterprise sizes, ranging from $500 million in revenues to over $10 billion.

The report found that climate change remains one of the top priorities for executives, ranking third in order of importance in the survey’s list of most pressing issued to focus on over the next year, cited by 37% of respondents, closely behind innovation (including artificial intelligence and digital) and economic outlook at 38% each.

The high ranking of climate change as a priority comes as executives appear increasingly concerned about its effects, with 70% of respondents reporting that they expect climate change to have a high or very high impact on their company’s strategy and operations over the next three years, up from 61% last year. Among the top climate-related issues that are already impacting companies, 51% of executives noted changing consumption patterns or preferences, followed by 50% citing regulations aimed at decreasing emissions or environmental impacts, and 50% reporting operational impacts from climate-related disasters or weather events.

While executives reported becoming more concerned about climate change, however, the report found that they are also increasingly focused on opportunities to achieve direct benefits to their businesses through their sustainability-related investments and initiatives. Material benefits such as supply chain efficiency and resilience and operating margins ranked within the top 5 benefits already being experienced by companies as a result of their sustainability efforts, compared with less tangible benefits such as brand recognition and reputation reported in the prior year survey. Notably, nearly half of respondents said that their companies are already taking action on developing new climate-friendly products or services.

Looking ahead, executives are anticipating innovations around their operations and offerings as the top benefit expected from their sustainability efforts, cited by 38%, with other benefits including addressing climate change (37%) the ability to recruit and retain talent (36%), and cost savings and lower cost of capital (36%).

Jennifer Steinmann, Deloitte Global Sustainability Business leader, said:

“We may be entering a new phase in corporate climate action, one where sustainability strategy goes beyond a focus on compliance, risk management, and stakeholder responsiveness. Instead, sustainability is increasingly serving as an engine for new value creation, a competitive differentiator, and a driver of innovation and transformation.”

In addition to seeing more opportunities, executives also appear to be more optimistic about addressing climate change, with 92% agreeing that their companies can continue to grow while reducing greenhouse gas emissions, and 92% reporting that they are optimistic that the world will take sufficient steps to avoid the worst impacts of climate change, up from only 78% last year.

As executives experience and anticipate benefits from their sustainability efforts, they are also investing more towards these initiatives, the survey found, with 85% of respondents reporting that they have increased their sustainability investments by more than 5% over the past year, up from 75% in the past year, and only 1% reporting decreasing investments. Additionally, 45% of executives reported that their companies are transforming their business models to address climate change and sustainability as a central part of their strategy, and another 35% said that sustainability considerations are embedded throughout the organization, but are not yet impacting the core business model.

Examining the actions companies are taking as part of their sustainability efforts that survey found that half of companies are already implementing technology solutions to help achieve climate or environmental goals (50%) and are developing new climate-friendly products or services (48%), with other top actions including using more sustainable materials, increasing energy efficiency (49%), and purchasing renewable energy (49%).

Top areas of technology implementation include monitoring and managing supply chain environmental performance, cited by 57% of respondents who said that they are implementing technology solutions, followed by process or operational efficiency at 54%, internal monitoring of sustainability data and performance at 54%, developing new sustainable products or services at 52%, and external reporting of sustainability data at 49%

Additional key actions taken by companies according to the survey included requiring suppliers and business partners to meet specific sustainability criteria, reported by 47% of respondents, reconfiguring operations, infrastructure and supply chains to be more resilient (46%), and tying senior leaders’ compensation to sustainability performance (43%).

The report also found that executives were becoming more focused on “just transition” issues, or ensuring that the benefits of the green economy transition are shared widely and supporting those who stand to lose economically, with 55% reporting that these factors are extremely important in their companies’ sustainability efforts, and citing actions being taken including working with local communities to help mitigate climate change vulnerability, reported by 54%, and half (49%) of respondents saying that they are preparing workers to transition to green jobs.

Joe Ucuzoglu, Deloitte Global CEO, said:

“It’s encouraging to see the notable increased investment in sustainability efforts in this year’s data along with the focus on using technology as a catalyst to advance climate solutions. We are seeing more organizations looking to transform their core business models to address climate change, leverage climate action to drive innovation and growth, create new value for their stakeholders, and differentiate themselves from their competitors.”

Click here to access the survey.