Companies subject to European Union regulations on climate risk management and disclosure are significantly more likely to view climate risk as a top organizational concern – and a potential strategic opportunity – compared to their global peers, a study conducted in part by AICPA & CIMA found.
The global survey of 436 board members, C-suite executives and risk managers was developed by researchers from NC State University in the United States, the University of Bari Aldo Moro in Italy and the University of Economics Katowice in Poland, and fielded in late 2024 with the help of AICPA & CIMA. Titled “Managing the Risks of Climate Change: Insights into Business Practices,” its findings include:
- 49% of organizations with headquarters or operations in the European Union view climate risk as a top 10 risk concern for their organization. Only 24% of non-EU organizations held a similar view.
- 57% of organizations with EU headquarters or operations perceived that investor expectations related to climate risk have increased in the past two years, compared to 28% for non-EU organizations.
- 49% of organizations with EU headquarters or operations have designed and implemented systematic processes to manage climate risk. That falls to only 19% of organizations that do not have operations in the EU.
- 49% of organizations with EU headquarters or operations have a management-level risk committee overseeing climate risks, while only 14% of non-EU organizations do.
A likely reason for the disparity in EU and non-EU organizations’ views on climate risk, the survey found, is the onset of European Sustainability Reporting Standards under the EU’s Corporate Sustainability Reporting Directive (CSRD).
“The higher level of investment by organizations with EU headquarters or operations in systematic processes, including management-level risks committees, may reflect greater understanding of the realities of climate-related risks as evidenced by their more likely inclusion of climate risk as a top 10 risk concern,” noted Mark Beasley, Alan T. Dickson Professor and director of the ERM Initiative at NC State.
One silver lining: a quarter of organizations with operations in the EU expressed a high or very high appreciation for strategic opportunities provided by effectively managing climate risks, compared to less than 10% of non-EU firms.
‘This research study demonstrates that managing climate-related risks is a high priority for EU companies, catalysed by reporting under the CSRD,” said Jeremy Osborn, AICPA & CIMA’s global head of sustainability. “Non-EU companies have some catching up to do and their EU counterparts provide a strong role model for the appropriate governance arrangements for managing such risks.”
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