Eversheds Sutherland and KPMG reveals the importance of the People Factor in helping companies achieve Net Zero

Boardrooms, senior executives and business leaders are increasingly confident in addressing challenges presented by climate risk, but a failure to consider the 'People Factor' in any boardroom decarbonization strategy could undermine climate change mitigation efforts, according to a new report from Eversheds Sutherland and KPMG.

The survey, with its findings published in a report entitled ‘Climate Change & the People Factor,’ reveals that the reality of climate change awareness has permeated boardrooms across the globe and is recognized as a priority issue with significant implications for companies' business models and impact on their stakeholders: from employees through to the broader community in which businesses operate.

The survey also found that climate change expertise is valued increasingly highly. Many companies have already appointed climate change experts to their boards, while also looking to reskill and retrain their existing staff to meet the challenges of the low carbon economy. Planning and engagement with all stakeholders will be essential to a successful transition, as will working in partnership with government and educators to ensure the necessary supply of skills.

‘Climate Change & the People Factor’ was published on Tuesday, November 9 to coincide with the 2021 United Nations Climate Change Conference (COP26). The joint survey of 1,095 C-suite leaders across some of the world’s leading companies was conducted by global legal practice Eversheds Sutherland and professional services organization KPMG. The report follows a similar review of C-suite opinions and attitudes to climate risk, published by Eversheds Sutherland and KPMG in 2020, entitled ‘Climate change and corporate value.’

• All respondents said their companies have a strategy or plan to identify, qualify and report climate risk to the business. However, only half have established a clearly defined decarbonization plan to date
• Seventy-four percent say that they have the climate knowledge, resources, skills and expertise to develop and deliver on their current decarbonization plan. Last year, 47 percent said not having the right skills in the business was the most challenging barrier to decarbonization
• Over half of respondents say their companies have not yet appointed a climate change expert to the board
  

• Nearly all respondents recognize that significant changes are needed to their company’s business model, all or in part, to deal effectively with climate risk. Last year, only 74 percent identified that significant changes are needed to the business model
• Approaching two-thirds of executives surveyed indicated that they expect some adverse impact on the workforce due to decarbonization, which includes nearly a third of respondents who anticipate redundancies as part of their transition to a low-carbon organization
• Nearly all of those anticipating a skills shortage plan to upskill or retrain their workforces to meet their needs
  

• As 46 percent of respondents say they anticipate a high level of resistance to the significant business model changes that will be required, effective change management will become an important factor
• Many organizations have attempted to harness the goodwill of their workforces through social norms and supporting environmentally-friendly policies and benefits
• While the vast majority of respondents said their companies have introduced performance objectives and remuneration incentives for director-level and senior staff, less than one-third have established individual or team KPIs, or remuneration incentives tied to decarbonization goals, for the wider workforce
  

‘Climate Change & the People Factor’ is co-authored by Diane Gilhooley and Herbert J. Short, Global Co-Heads of ESG at Eversheds Sutherland; Mike Hayes, Global Head of Renewables for KPMG International and Global Head of Climate Change & Decarbonization for KPMG IMPACT; and Sophie Heading, Global Geopolitics Lead, KPMG International.

The research in this report was carried out on behalf of Eversheds Sutherland and KPMG IMPACT by independent research agency Explain the Market Ltd.

1,095 board members, directors and C-suite executives from the world's leading companies were interviewed via a telephone survey during August 2021. The survey included leaders from eleven key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, United Kingdom and the United States) and 16 key industry sectors (asset management, automotive, banking, consumer, chemical, energy, infrastructure, manufacturing, insurance, life sciences, media, mining, real estate, technology, telecommunications and transport).

All research has been carried out in accordance with MRS and ESOMAR codes of conduct. In addition to the survey, individual in-depth interviews were carried out with six of the most well-respected thought leaders in business in the areas of climate risk and sustainability.

As a global top 10 law practice, Eversheds Sutherland provides legal services to a global client base ranging from small and mid-sized businesses to the largest multinationals, acting for 70 of the Fortune 100, 61 of the FTSE 100 and 128 of the Fortune 200.

With more than 3,000 lawyers, Eversheds Sutherland operates in 74 offices in 35 jurisdictions across Africa, Asia, Europe, the Middle East and the United States. In addition, a network of more than 200 related law firms, including formalized alliances in Latin America, Asia Pacific and Africa, provide support around the globe.

Eversheds Sutherland provides the full range of legal services, including corporate and M&A; dispute resolution and litigation; energy and infrastructure; finance; human capital and labor law; intellectual property; real estate and construction; and tax.

Eversheds Sutherland is a global legal practice and comprises two separate legal entities: Eversheds Sutherland (International) LLP (headquartered in the UK) and Eversheds Sutherland (US) LLP (headquartered in the US), and their respective controlled, managed, affiliated and member firms. The use of the name Eversheds Sutherland is for description purposes only and does not imply that the member firms or their controlled, managed or affiliated entities are in a partnership or are part of a global LLP. For more information, visit eversheds-sutherland.com.

KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. We operate in 146 countries and territories and in FY20 had close to 227,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

Launched in June 2020, KPMG IMPACT is the accelerator for KPMG’s global ESG strategy. It is the platform which supports and empowers KPMG professionals as they assist clients in fulfilling their purpose, achieving their ESG goals and supporting the world’s attainment of the UN Sustainable Development Goals. It helps clients across ESG & Sustainability, Economic & Social Development, Sustainable Finance, Climate Change & Decarbonization and Measurement, Assurance & Reporting.

Click here to read more about KPMG's ESG strategy.