Costs Could Rise Even More in 2023—and Thousands of CEOs Blame Climate Change

Yves Herman | Reuters

Thousands of CEOs say they expect 2023's high prices to rise even more over the course of the year. Their reason: climate change.

A majority of company leaders expect to see anywhere from a "moderate" to "very large" impact on costs due to climate change within the next year, according to a recent survey of more than 4,400 CEOs from around the world, conducted by accounting and consulting firm PwC.

In recent months, climate-fueled disasters have killed crops, eroded infrastructure, impeded energy supplies and prevented workers' from staying on the job amid record heat. Such incidents have led environmental experts and economists to establish a link between climate change and inflation.

Climate change isn't considered a primary driver of today's inflation, but economists say the connection will deepen as the planet continues to warm — making the link more noticeable and acute.

"If we ignore it and don't do anything about climate change, it will become a staggering cost," Suzi Kerr, chief economist at the nonprofit Environmental Defense Fund, told The Hill last year. "And it will have a huge impact not only on grocery bills, but many other aspects of our ordinary lives."

At the corporate level, only CEOs who feel directly exposed to climate change are likely to take steps to address it, PwC's survey found.

That "creates risks of its own," the report's authors wrote, adding that climate change "won't be solved if the only companies working on it are those that face immediate financial impact."

Many company-driven climate efforts aren't even particularly successful, the report noted.

Popular decarbonization efforts, like moving toward zero-emissions electricity or increasing energy efficiency, are increasingly seen as too little, too late: There's already enough carbon in the atmosphere to make increased warming all but inevitable, according to a 2022 report from the United Nations

Then, there's the matter of "greenwashing" — overselling your environmental commitments to seem consumer-friendly. In Europe, 42% of "green claims" made by companies were found to be "exaggerated, false or deceptive," according to 2021 research from the European Commission and national consumer authorities.

Ironically, greenwashing actually damages a company's relationship with its customers, with the exception of brands so highly trusted that people are willing to give them a pass, research shows.

One potential solution: Find places where environmental impacts help your company either save or make more money, the report's authors suggest.

Nike, for instance, has spent the past decade using a form of fabric weaving that uses less material and labor time, according to the Los Angeles Times. The company's expenditures on materials, transportation and waste disposal have fallen — and millions of pounds of potential waste have been kept out of landfills, the Times reported in 2019.

Nestle's thinner plastic water bottles and Walmart's efforts to recycle trash into new products have had similar effects, the Times noted.

"We've moved past this concept that business versus the environment is a tradeoff," Environmental Defense Fund executive vice president Tom Murray told the Times. "The business benefits were always there, but more and more companies are going after them."

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