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The Actuary The magazine of the Institute & Faculty of Actuaries

CFOs reveal pressure to act on climate change

Around half of chief financial officers (CFOs) in Europe are feeling pressure from their customers and employees to take action on climate change, a new survey by Deloitte has found.

Businesses failing to adopt emission targets ©iStock
Businesses failing to adopt emission targets ©iStock

In response, 70% of European CFOs said they are increasing or planning to become more energy efficient, for example in their buildings.

However, the findings show that 51% have not yet adopted any carbon emission targets, and only 27% plan to assess the risk of climate change to their business.

“Only a handful of companies are integrating climate change risk into business planning in a significant way,” said Deloitte senior partner, Richard Houston.

“Efforts are certainly increasing, but more needs to be done across industries on an international scale.

"This should also help businesses connect with a new generation of consumers, employees and investors alike.”

The survey findings also show that 36% of CFOs feel more pessimistic about their companies’ financial prospects than they did three months ago, double the 18% that said the same in spring 2015.

Just 18% consider now to be a good time to take on risk – the lowest percentage recorded by Deloitte – with only16% keen to take on risk inside the euro area.

Companies more heavily reliant on global trade, including those in the automotive, industrial and transport sectors, showed the least risk appetite.

This correlates with the continual increase in perceived financial and economic uncertainty, with 69% of CFOs rating the current level of uncertainty as “high” or “very high”.

Moreover, it was found that 27% forecast a rise in capital spending in the next 12 months, down from 36% in the spring, while 32% plan to decrease their headcount, compared with 27% planning an increase.

Ian Stewart, UK chief economist at Deloitte, said: “Trade disputes, elevated uncertainty and a global slowdown have knocked the confidence of European CFOs.

“While European equities have soared, risk appetite in the real economy among CFOs has dropped to a four-year low.

“Faced with an uncertain outlook, CFOs are shelving investment plans and doubling down on cutting costs.”

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