A majority of business leaders say that a long term agreement at the UN climate summit (COP21) in Paris is critical to supporting private sector investment in low carbon solutions, according to a global study by the United Nations Global Compact and Accenture. The report also reveals that executives see action on climate change as an opportunity for growth and innovation that will be essential to securing competitive advantage in their industries.

The UN Global Compact-Accenture CEO Study report, Special Edition: A Call to Climate Action, is based on a survey of 750 business leaders from UN Global Compact participant companies. The research, undertaken by Accenture Strategy, reveals that 70 percent of executives representing companies with annual revenues of more than $1bn see climate change presenting opportunities for growth and innovation for their company within the next five years. Sixty-seven percent already see a clear business case for action on climate change.

In the broader sample of business leaders across 121 countries, more than half (54%) of all respondents say that climate change will create opportunities for their company within the next five years. Forty eight percent believe that there is already a clear business case for action.

“The international community has a unique opportunity in Paris to advance action on climate change through a bold, ambitious and universal agreement,” said Lise Kingo, Executive Director of the United Nations Global Compact. “Our research clearly shows that business leaders are committed to leading the way, and we believe that business can play a central role in galvanizing momentum to meet the first test of our collective ability to deliver collaborative action on the Sustainable Development Goals.”

Priority policy actions

Business leaders are clear that government action is critical to supporting further progress. Seventy four percent of executives at companies with more than US$1 billion in annual revenues, and 61 percent of all respondents, see a long-term agreement in Paris as critical to unlocking private-sector investment in climate solutions.

The concern about policy action comes as two thirds (66%) of business leaders say that the private sector is not doing enough to tackle climate change. Ninety-one percent believe that action is an urgent priority for business, but just one-third (34%) see progress on track to restrict global warming to less than the 2°C limit.

The study identified five key policy measures that can unlock further private sector investment in climate solutions:

1. Legislative and fiscal mechanisms to increase investment in climate solutions;

2. Financial instruments to stimulate R&D and innovation in low-carbon solutions;

3. Performance standards to reduce greenhouse gas emissions and enhance climate resilience;

4. Global, robust and predictable carbon pricing mechanisms;

5. The removal or phasing out of fossil fuel subsidies.

To explore preferred policies to support private sector action, the study surveyed 75 CEOs of corporate signatories to Caring for Climate, the initiative to advance the role of business in addressing climate change launched in 2007 by the UN Global Compact, UN Environment Programme and the secretariat of the UN Framework Convention on Climate Change. Three-quarters of these CEOs believe that carbon pricing is an essential tool in accelerating action on climate change. Eighty-two percent say that business needs a clear roadmap and timeline from governments on policies related to future carbon pricing mechanisms. Eighty-four percent believe that carbon markets, enabled by a robust carbon price, can drive low-carbon innovation and investments in clean energy and efficiency.

Reflecting on the road ahead and the ability of their companies to plan effectively for the future, 38 percent call for more stringent and consistent performance standards that can reduce emissions and enhance climate resilience; and 31 percent see the removal or phasing out of fossil fuel subsidies as key to further progress.

“For perhaps the first time, we are beginning to see a united front of business leaders and policymakers setting their course toward a bold deal that can begin to close the gap between ambition and execution on climate,” said Peter Lacy, managing director, Accenture Strategy. “It is clear from our research that business leaders increasingly see climate change through the lens of fundamental disruption in their industries, and that leading companies are approaching climate change as an opportunity for growth, innovation and competitive advantage.”

Actions for businesses

The study also identifies five key leadership behaviors that will be essential for companies to adopt in their efforts to play a leading role in addressing the climate challenge:

1. Providing proactive, constructive input for governments to create effective climate policies;

2. Collaborating with industry peers to foster leadership, innovation and scaling of climate solutions;

3. Investing in low-carbon technologies and solutions to drive energy efficiency, grow the supply of renewable energy, leverage low-carbon innovations and build climate resilience;

4. Taking concrete measures to increase climate resilience in operations and communities;

5. Setting emissions reductions targets in line with science and the 2°C limit.

The report includes open letters to business leaders and policy makers, written by the CEOs of some of the leading proponents and practitioners of climate change action.