(Credit: Pixabay)US companies are encountering significant, long-term consequences — including lost sales — for not proactively addressing the climate crisis, according to a new report from Next Energy Technologies. Among measurable pressures from partners, government regulators and investors, 33% of companies surveyed reported losing business to their competitors because of insufficient climate practices. Without properly addressing these concerns, companies risk losing employees, sales, and investments to more green competitors in an already volatile marketplace.
NEXT surveyed more than 200 cross-industry senior managers, executives, and C-suite decision-makers to better understand the challenges businesses face in addressing the climate crisis and what they’re doing to meet the mounting pressures from regulators and the broader business ecosystem. The report, "Paying the Apathy Tax: How Climate Inaction Will Cost Companies," defines the response to pressures on companies into two categories — “hard” and “soft” compliance with climate change mitigation measures.
Hard Climate Compliance: A quick and direct response to factors beyond the company’s realm of control, including government mandates, regulations, and environmental urgency.
Soft Climate Compliance: A measured response to more abstract factors, including social contracts, investment in real progress, customer or public perception, profit, or market access.
Across the board, US companies are working to improve their sustainability practices — 80% reported that their business has taken a more active approach to its environmental impact over the last few years. When queried about the primary driver behind increased climate action, respondents cited their leadership’s personal interest in climate progress (49%), access to new environmental-focused markets (34%) and PR/company image goals (32%) as the top factors.
Customers are wielding their buying power — they are more educated and socially engaged than ever and recognize that their money and how they spend it has influence over what companies do with their sustainability plans.
Seventy-four percent of respondents believe their customers are now more interested in buying and engaging with companies more seriously addressing their environmental impact. The challenge of public perception is reflected in the steps companies say they’re taking to improve their impact and image:
Companies also report facing pressure from the broader business ecosystem of investors, vendors and other professional service partners. Nearly half (46%) of respondents reported discussing sustainability issues when engaging with outside entities. Further, 77% reported altering their company’s environmental impact plan based on those conversations.
Across the US, business leaders are facing regulatory changes from both the federal and state governments. As climate change moves from “issue” to “crisis,” governments at all levels are beginning to recognize the importance of sustainable changes, and expecting businesses to recognize their climate impact — and take the necessary steps to change it. Eighty-two percent of respondents reported that government environmental regulations have required them to change the functions of their business.
One of the clearest and most observable manifestations of these changes is in the physical characteristics of the buildings these companies occupy. In 2021, the California Energy Commission (CEC) voted to require builders in the state to include solar power and battery storage in certain new commercial structures as well as high-rise residential projects.
Seventy percent of respondents reported willingness to alter features of their physical buildings and other workspaces to meet increasing demands. The leading choices of change were adding energy-efficient or energy-generating features and improving water conservation methods.
Of those surveyed, 71% believe their companies’ sustainability efforts are “enough” to meet impending regulatory requirements and consumer demand for action. In a previous report by NEXT, 74% of employees said they would consider leaving their job if their company wasn’t meeting their expectations for climate and sustainability.
As consumer, investor, and even employee behavior continues to reward companies that go beyond the bare minimum of today, it’s imperative business decision-makers understand the risk of sales, employee, and market attrition if they lag behind.
