Economic headwinds weigh on executives’ climate optimism

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THE BIG PICTURE

More companies are claiming sustainability is among their top corporate initiatives, but optimism on making near-term progress on climate goals has waned, according to a quarterly survey that tracks executive sentiment around sustainability issues.

The Honeywell Environmental Sustainability Index showed that more than 40 percent of executives surveyed were extremely optimistic in the second quarter of this year that their firms would hit their 2030 climate targets. However, optimism about the year ahead declined across three out of four categories.

The Honeywell index measured executives’ optimism and pessimism as it relates to four different segments: energy evolution and efficiency, emissions reduction, pollution prevention, and circularity and recycling.

A larger percentage of executives also indicated that sustainability goals were among their top priorities for the coming six months compared with the prior quarter. Meanwhile, segments such as workforce and talent development and business continuity fell lower on some executives’ short-term priority lists, according to the survey results.

Executives see economic and geopolitical headwinds as the biggest barriers their companies face as they try to reach their environmental sustainability targets, the survey showed. (And they could very well be right — Fed economists are predicting a mild recession later this year.)

The percentage of organizations that had plans to increase their investments in sustainability initiatives also declined to 83 percent from 87 percent, according to the Honeywell index. Thirteen percent of organizations are maintaining their investment levels, up from 11 percent the prior quarter.

That being said, the idea of economic headwinds hampering sustainability initiatives isn’t new. A KPMG poll done last year found that many CEOs were reconsidering ESG plans in light of concerns over a possible recession.

The percentage of respondents who said they felt their organizations were extremely successful in accomplishing their climate goals over the last 12 months also slipped in almost every category.

The survey included responses from 751 business leaders who are involved in their organizations’ environmental sustainability goals in some way.

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