US execs not convinced Net Zero is commercially viable, finds Standard Chartered

A survey of 250 senior US-based company executives by Standard Chartered (SC) has found that 64% believe “it is not commercially viable for them to operate as a net-zero organisation”.

The study, released last week, examined the barriers faced by US companies when transitioning to Net Zero business models and what companies have accomplished so far. 

Despite increasing pressure to establish green policies, the majority of US firms remain focused on short-term profitability with more than three quarters of executives saying that they “struggle to justify sacrificing reliable revenue from a proven business model today, for uncertain revenue tomorrow”, the report said. In addition, 62% of surveyed executives said they didn’t think that the benefits associated with a low-carbon transition would be enough to outweigh its costs.

As a result, 71% of executives say they are planning to defer climate action to between 2030 and 2050, setting the 2020s up as “a lost decade”, according to the report. Some 4% of executives have no plans to take any actions on climate change.

A key complaint from executives was that the push for Net Zero among regulators and investors had in fact resulted in the withdrawal of capital from carbon intensive industries at a time when investment is needed to pivot to low-carbon models. More than 70% of executives said that regulations protecting investors from climate risk and the pricing of transition risks into asset values would make it harder to finance Net Zero plans.

Commenting, Amit Puri, SC’s Global Head of Environmental & Social Risk Management said: “To reach net zero, investors cannot just walk away from carbon-intensive sectors. Financing these companies helps them invest in the research and development critical for developing clean technologies and pivoting their business models. Many of these companies are actively engaged in the net-zero challenge and their involvement will be key to transitioning global infrastructure, energy supplies and consumer products.” 

However, investors engaging with the world’s largest emitters say that companies are continuing  to “posture” while making  little actual progress on planning for their transitions. Last week, it was revealed that none of the 159 companies targeted by influential investor group Climate Action 100+ had fully disclosed their Net Zero transition strategies, despite ongoing dialogue over two and a half years.

Other points raised by executives in the survey included concerns that they have no visibility and control over supply chain emissions (64%), the unavailability of technology needed to transition in areas such as carbon reduction (51%) and the lack of bold business leadership on achieving a successful transition (78%).

The report comes soon after the US Securities and Exchange Commission and Federal Reserve announced regulatory initiatives to address climate change risk across their operations. It also comes as 43 asset managers made Net Zero pledges today, meaning their holding companies will be under pressure to align with the commitment.