Almost half of companies globally currently have no decarbonisation plan in place, and the majority of those have no intention of developing one in the near future – suggesting that large corporations’ supply chain engagement around climate still has a long way to go.
Multinational corporations are ramping up efforts to decarbonise their supply chains, but a new survey published this week by PwC, the Association of Chartered Certified Accountants (ACCA) and IFAC suggests that small and medium firms are yet to identify clear benefits in joining the net zero movement.
The study gathered answers from about 1,000 finance professionals in companies of all sizes, but the majority of respondents (67%) work at small or medium organisations. It shows that 46% of companies do not have an emissions reduction plan in place, with almost 70% of those suggesting they have no intention of developing one in the foreseeable future.
Despite the urgency of the climate crisis, only 25% of organisations without a transition plan expect to finalise one within the next year. Another 31% intend to create a plan, but with no fixed timescale – and the majority (38%) currently don’t intend to develop a plan at all.
Lack of clarity on benefits make transition planning a low priority
The biggest barrier to developing an emissions reduction plan appears to be a lack of clarity on the business benefits of doing so for 30% of respondents. Lack of awareness on the issues, understanding of what the plan should include, and technical and financial resources are also cited as obstacles.
“There is a sense from the data too that the issue for many organisations is that emissions planning remains too little a priority, particularly with competing demands placed on organisations,” note the authors.
SMEs at risk of being excluded from supply chains
There are, of course, some nuances in the data. Unsurprisingly, large organisations are more likely to be planning emissions reductions and assessing the impact of a growing body of climate regulations on their business. The study’s authors point out that large companies also have access to more resources and internal expertise to conduct transition planning.
In contract, SMEs in the survey said they struggle to gather ESG and emissions data and are worried about the perceived training and technology costs of developing transition plans.
“This simply ratchets up the risk that smaller businesses in the supply chain will be replaced by competitors who are able to provide more comprehensive and reliable ESG data, especially to larger organisations,” warn the study’s authors.
Location matters – and Africa lags behind
Location-wise, about a quarter (24%) of companies surveyed operate in Western Europe, 38% in Asia Pacific and South Asia, 12% in North America and 19% in Africa and the Middle East. South America and the Caribbean represent only 3% of the sample.
The study notes some clear regional differences in climate ambition, and places the US as “the leader” with almost three quarters of firms having a plan in place – though that may be because many of the larger organisations in the survey are based there.
“South Asia, Asia Pacific, Western Europe and the Middle East form a mid-tier where just over half (54%– 58%) of respondents said they had a plan. Survey respondents from Africa had the least organisational preparedness, with just over a quarter saying they had a plan in place,” says the report.