Environmental risk and climate change top worldwide CEO’s ranking of threats to growth, 5th KPMG Global CEO Outlook shows

KPMG asked CEOs across all industries what they saw as the biggest threat to growth over the next three years. And, for the first time in the history of the KPMG Global CEO Outlook, they identified environmental and climate change as the top risk.

Climate change rises up on the risk agenda, from fourth in 2018 to the number one this year. Framed into a dynamic risk landscape the environmental challenge is closely followed by the disruptive technology risk and the threats posed by a return to territorialism.

© KPMG

Concerns over environmental degradation, the disruption caused by new technologies and increasing geopolitical tensions are creating new levels of uncertainty for leaders as they look to meet or exceed their growth targets.

Tom Brown, Global Head of Asset Management, KPMG International, sees climate risk topping the agenda as a welcome sign that CEO and investor views are coming closer together.

“Asset managers and investors have long recognized that climate change is a major financial risk,” he says. “For investors, climate risk and other sustainability factors are a big consideration in decisionmaking. They will move away from asset classes that they think are at risk. One area that CEOs need to think about is disclosures, meeting stakeholders’ demands for corporate reporting that provides meaningful information on climate risks that have a financial implication.”

Energy transition top of the environmental risk agenda

As CEOs look to manage this risk, their attentions are turning to energy transition, and the need to move the world away from a reliance on fossil fuels.

Over three-quarters of CEOs surveyed (76%) say that their organization’s growth will depend on their ability to navigate the shift to a low-carbon, clean-technology economy.

Further than a risk, a driver for new business opportunities

As well as sustainable business practices being of value to society, CEO’s can also unlock growth and transform performance though actions to tackle the environmental risk. Sustainable approaches can create opportunities for new products and services and can also improve the efficiency in how the organization manages its resources and operations.

Specially for Energy companies’ CEOs

A 73% of energy CEOs surveyed said their organization’s growth will depend on their ability to successfully navigate the shift to a low-carbon economy.

Energy companies face their own significant operational and financial risk from climate change. At the same time, they have an opportunity to be global leaders in lowering carbon emissions.
To help themselves and their customers alike, the industry is developing an energy mix that balances the ongoing role of fossil fuels with new renewable and alternative sources.

For Markus Tacke, CEO of Siemens Gamesa, a world leader in renewable energy, he see lots to be optimistic about the future. “Generally we see growth opportunities, especially in the renewables and wind industry. While the prognosis of the world economy seems to have greater downside risk than upside, the current fundamental of our industry gives us every reason to have an optimistic outlook.”

1.300 CEOs in 11 of the world’s largtest economies surveyed

The survey data published in this report is based on a survey of 1,300 CEOs in 11 of the world’s largest economies: Australia, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US. The survey was conducted between 8th January and 20th February 2019.

The CEOs operate in 11 key industries: asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications.

Of the 1,300 CEOs, 310 came from companies with revenues between $500 mill and $999 mill; 543 from companies with revenues between US$1Bn and US$9.9 Bn; and 447 from companies with revenues of $10Bn or more.

Image over the headline.-NewLogic III building known as The Tube (Rhenus sustainable headquarters and logistics hub in the Netherlads). © Reynaers Aluminium.

The Tube is Rhenus headquarters and logistic center next to the motorway in Tilburg (NL). The building has triple-glazed windows, extra insulation, a ground-source heat system and automatically controlled LED lighting. It also includes EV charging points and a building management system which regularly monitors energy use, water consumption and CO2 concentrations are also built-in.There are 11,600 solar panels on the roof of The Tube, so that the building generates more electricity than it needs sending the surplus back to the grid. Developer Dokvast commissioned Habeon Architecten to design this highly sustainable building for Rhenus Logistics. Hung Tran of Habeon Architecten is responsible for the futuristic design of this cutting edge headquarters and logistic hub for Rhenus.

This logistics centre is extremely sustainable in the broadest sense of the word, assures Tran. “Not only in its use of materials and energy, but also because it offers a pleasant working environment and can be divided flexibly. And that’s necessary, because developments in the logistics sector are moving fast, and if we want these buildings to remain in place for a long time, we need to design them intelligently. The client also explicitly demanded a distribution centre for the future,” Tran says.

Related external links:

KPMG 2019 Global CEO Outlook

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