Most executives have increased their investment in sustainability during the past year as regulators prepare to crack down.
A global survey has also found most (82 per cent) were personally impacted by climate events in the past year, including extreme heat and powerful storms.
The Deloitte survey of more than 2000 executives across 24 countries, including 105 in Australia, found pressures to spend more on decarbonisation were expected to grow.
Climate change was one of the top issues facing executives, second only to the economic outlook, ahead of skills shortages, supply chain woes and geopolitics.
Responding to the values of their workforce, almost two-thirds (63 per cent) cited employees as a reason for the organisation’s actions on sustainability.
More than half said employee activism on climate matters has led their organisations to increase sustainability actions during the past year and almost a quarter (24 per cent) said it led to a “significant” increase.
Almost three-quarters of millennials and Generation Z workers – covering most early to mid-career staff – say climate change contributes to their feelings of anxiety or stress.
The survey found most Australian business leaders (79 per cent) remain optimistic climate goals can be met without sacrificing economic growth.
Top actions taken included using more recycled materials and lower-emitting products, greater energy efficiency in buildings, more energy-efficient machinery and equipment and training staff.
Companies are also ramping up climate adaptation, including insurance against extreme weather risks and financial assistance for workers hit by floods, drought and storms.
Other options proved harder to implement, including developing new climate-friendly products, getting suppliers to meet sustainability criteria, updating facilities and tying executive pay to a greener performance.
More than three-quarters (78 per cent) said a fast-changing Australian regulatory environment had motivated climate action in 2022.
Head of Deloitte Access Economics Pradeep Philip said Australian business executives were starting to see the shift from voluntary to mandated change.
“The recent proposed change to the safeguard mechanism and emissions targets for big polluters show the regulatory environment is changing,” he said.
“This trend is likely to continue, marking the end of the age of voluntary action and the beginning of a new period of mandatory transition.”
More than 200 of Australia’s largest industrial plants are already covered by the mechanism that sets an emissions limit, known as a baseline.
Changes set to take effect from July 1 aim to force heavy industry emissions down more quickly, by five per cent overall each year to 2030.
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