CEOs Maintain Climate Strategies Amid Changing ESG Communication Landscape, KPMG Finds

More than two-thirds of CEOs remain committed to their climate strategies, but many are altering the language and terminology used to communicate these efforts, according to a new survey by KPMG. While there is uncertainty about achieving near-term climate goals, most CEOs expect significant returns from their sustainability initiatives over the next five years.

KPMG’s 2024 CEO Outlook survey, which gathered responses from 1,325 CEOs in North America, Europe, and Asia Pacific from companies with revenues exceeding $500 million, revealed that environmental, social, and governance (ESG) issues remain a top priority. “Execution of ESG initiatives” ranked among the top three operational priorities for the next three years, alongside “understanding and implementing generative AI” and “advancing digitization and connectivity” within businesses.

However, the survey also highlighted the growing political pressure around ESG matters. Despite these challenges, 69% of CEOs stated that their climate strategies remained unchanged over the last year, though they adjusted the language and terminology used to address evolving stakeholder expectations.

John McCalla-Leacy, Head of Global ESG at KPMG International, noted that ESG, once a symbolic commitment, has now become a core priority for business leaders aiming for sustainable growth. He observed that as political polarization around issues like social mobility and climate change intensifies, CEOs face increasing pressure. Despite this, he pointed out that CEOs are demonstrating resilience by adapting their communication strategies rather than abandoning their sustainability goals.

While climate strategies are largely intact, many CEOs expressed doubts about reaching their targets. For instance, in the U.S. portion of the survey, only 54% of CEOs felt confident their organizations would meet net-zero targets by 2030. Challenges such as decarbonizing supply chains and a lack of skills and expertise were identified as key obstacles, each cited by 24% of respondents.

Paul Knopp, KPMG U.S. Chair and CEO, noted that while CEOs remain committed to their climate strategies, operationalizing these plans—particularly decarbonizing supply chains—has proven difficult. Nonetheless, CEOs continue to expect financial returns from their sustainability efforts in the coming years.

In the U.S., 60% of CEOs anticipated significant returns from their ESG investments within three to five years, with 24% expecting these returns within one to three years. Additionally, 74% of respondents saw their ESG strategies as having the most significant impact on driving financial performance, while 26% believed the strategies would be crucial for attracting and retaining talent.

The survey also explored the potential risks CEOs face if they fail to meet ESG expectations. Globally, 24% of respondents identified losing a competitive edge as the biggest risk, followed by concerns about their tenure (21%) and difficulties in recruitment (16%).

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