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NEXT Energy Report: Businesses Pay the Apathy Tax for not Addressing Climate Concerns

The heightened pressure from investors, partners, government regulators and consumers to face the climate crisis head on has put businesses in the hot seat to prove they take the climate crisis seriously. When businesses fail to address these concerns or wait to address them until it's too late, they put themselves at risk of losing employees, sales and investments to more sustainable competitors.

NEXT Energy Technologies conducted a survey of more than 200 cross industry senior managers, executives and c-suite decision-makers to better understand what they’re doing to meet the pressures from regulators and the broader business ecosystem. The results show that companies believe they are doing their part to protect the planet, even though scientific evidence still shows that they are still not doing enough.

The way businesses react to climate pressures can be broken down into two categories – hard and soft compliance. Hard compliance with pressures means that businesses provide a quick and direct response to factors beyond the company’s realm of control including government mandates, regulations and environmental urgency. Soft compliance is a measured response to those abstract factors including social contracts, investment in real progress, customer and public perception, profit or market access.

Taking Action or Stepping Back

Companies are recognizing the potential in climate action. In fact, 80% of respondents report that their business has taken some sort of step to improve its environmental impact over the last few years.

The reasons for making these changes range from financial security to forced change through legislation. Surprisingly, however, the leading indicator of change comes from the company's leadership taking personal interest in the climate process. Business leaders believe it is their personal responsibility to lead their companies to a more sustainable future. To business leaders, improving sustainable practices also means access to new environmentally focused markets, improved brand image and increase in profit for their companies.

Even though 82% of workers believe that the climate crisis is an important issue to them, only 18% of business leaders report improving their companies’ climate process due to internal pressure from staff.

All About the Money

Consumers are no longer willing to buy from businesses who don’t support similar social causes. The power is in the hands of the consumer and they know that how and where they spend their money will influence what companies do with their environmental impact plans. One third (33%) of survey respondents reported that they have lost business due to their competitors’ sustainability practices and recognize that customers can and will spend money elsewhere to have their sustainability expectations met.

With 74% of respondents believing their customers are interested in buying and engaging with environmentally friendly companies, business leaders are turning to engage more closely with sustainable B2B suppliers. The top two steps businesses plan to take to combat customer loss include; improving supply chain processes and engaging with more sustainable suppliers, and improving shipping and handling methods to decrease carbon emissions.

Changes in consumer behavior are driving businesses to have conversations surrounding sustainability issues with interested financial parties. And these conversations work – 77% of respondents report altering their company’s environmental impact plan based on those conversations.

Bringing Down the Hammer

Regulatory changes on businesses by state and federal governments may be the biggest driver for businesses to recognize the importance of sustainable change. 82% of respondents reported that government environmental regulations encouraged them to change functions of their business.

While these changes vary depending on geographic location, the top three changes businesses plan to make to meet government regulations across the board include; improved water and/or other conservation measures, improving supply chain processes or engaging with more sustainable suppliers, and reducing the use of single-use materials in their operations.

California may be the toughest on builders and their sustainability practices. In 2021, the California Energy Commision voted to require builders to include solar power and battery storage in new commercial structures and high-rise residential projects. But even without regulations, 70% respondents across the country reported willingness to alter features of their physical buildings and other workspaces.

Is Doing Enough, Enough?

Business Leaders are happy with the changes they have made and don’t foresee themselves making further significant changes. But is this enough to keep employees? 74% of employees said they would consider leaving their job if the company wasn’t meeting their expectations. Employees aren’t the only ones willing to leave, 47% of business leaders reported they would consider leaving their company because of sustainability practices.

The 71% of business leaders that believe their companies’ sustainability efforts are enough need to take steps to save their staff from leaving the company. Skilled labor has become increasingly difficult to find and companies cannot afford to lose their tenured and experienced leaders.

Looking Towards a Greener Future

The pressures coming from all sides are exposing the unsustainable cost of inaction.

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Companies need strong leadership to take steps to address climate change and sustainability challenges directly, rather than those who just check the boxes. These companies will be rewarded by consumers and employees.

One sector where long-term sustainability will lead to dramatic pay-offs in the eyes of customers is commercial building. Commercial builders need to lead the fight for climate change in order to stay one step ahead of regulators and keep customers happy.

For more information on how businesses can reduce their impact on the environment without making costly or disruptive changes to their commercial buildings, download the full report here.


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