Eversheds Sutherland and 乐鱼（Leyu）体育官网 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 乐鱼（Leyu）体育官网.

The survey, with its findings published in a report entitled 鈥�Climate Change & the People Factor,鈥� 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.

鈥楥limate Change & the People Factor鈥� 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鈥檚 leading companies was conducted by global legal practice Eversheds Sutherland and professional services organization 乐鱼（Leyu）体育官网. The report follows a similar review of C-suite opinions and attitudes to climate risk, published by Eversheds Sutherland and 乐鱼（Leyu）体育官网 in 2020, entitled 鈥�Climate change and corporate value.鈥�

Key findings of the survey indicate growing confidence and opportunities for action:

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

Impacts on the business and workforce are widely understood and expected:

Nearly all respondents recognize that significant changes are needed to their company鈥檚 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

Engaging the workforce is expected to be critical:

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

鈥�Climate Change & the People Factor鈥� 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 乐鱼（Leyu）体育官网 International and Global Head of Climate Change & Decarbonization for 乐鱼（Leyu）体育官网 IMPACT; and Sophie Heading, Global Geopolitics Lead, 乐鱼（Leyu）体育官网 International.

Corporates have made significant progress in recognizing what needs to be done to address the challenges, compared to the initial report 鈥楥limate change and corporate value.鈥� What is clear though, is that more could be done at an individual and team level to assist with the drive towards decarbonization, and there is an opportunity for cooperation among businesses, training providers and governments to really advance this development and help ensure global businesses confront climate risk head-on.

Mike Hayes

Global Head of Climate Change & Decarbonization, 乐鱼（Leyu）体育官网 IMPACT & Global Head of Renewables

乐鱼（Leyu）体育官网 International

Business leaders have made significant progress in addressing climate risk within their organizations but recognize upskilling challenges and the people impact of climate transition. However, they also see the opportunities to further engage employees around this important topic and that doing so can help to accelerate the transition. Incentivizing employees to achieve implementation of solutions within their companies will help with that engagement. An organization that can harness both the skills and energy within the workforce to engage in the challenges presented by climate risk will see a significant boost in their progress towards decarbonization.

Diane Gilhooley

Partner

Eversheds Sutherland

The conversation around climate change often focuses on having the right policies, the right investment, the right technologies. These are critical, of course, but what about the human element? After all, it is the people within organizations that are expected to play a decisive role in the ability to meet ambitious global targets. Business leaders are beginning to invest in their human capital, to engage employees on the transition to low-carbon business models and make the most of their considerable influence over global workforces to unlock the ideas, innovation, skills and talent that will likely be needed in this race to net-zero.

Sophie Heading

Global Geopolitics Lead, Global Clients and Markets

乐鱼（Leyu）体育官网 International

The reality of transitioning to a global, low-carbon economy is becoming very real across the world. This is a once-in-a-lifetime transition for many businesses, with different implications for employees and their broader communities. However, corporations are not the only solution. Governments need to play an integral role in helping to ensure a retraining and upskilling of the workforce. There is a lot of focus right now on the physical decarbonization approach, so the people factor could easily be overlooked if governments don鈥檛 pay attention.

Herbert J. Short

Partner

Eversheds Sutherland

Methodology

The research in this report was carried out on behalf of Eversheds Sutherland and 乐鱼（Leyu）体育官网 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.

About Eversheds Sutherland

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.

About 乐鱼（Leyu）体育官网 International Limited

乐鱼（Leyu）体育官网 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 乐鱼（Leyu）体育官网 firm is a legally distinct and separate entity and describes itself as such.

乐鱼（Leyu）体育官网 International Limited is a private English company limited by guarantee. 乐鱼（Leyu）体育官网 International Limited and its related entities do not provide services to clients.

About 乐鱼（Leyu）体育官网 IMPACT

Launched in June 2020, 乐鱼（Leyu）体育官网 IMPACT is the accelerator for 乐鱼（Leyu）体育官网鈥檚 global ESG strategy. It is the platform which supports and empowers 乐鱼（Leyu）体育官网 professionals as they assist clients in fulfilling their purpose, achieving their ESG goals and supporting the world鈥檚 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.

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