Most companies unaware and unprepared for looming green transformation

The European Green Deal is set to transform the business landscape from tax and procurement to supply chain management but less than half of companies know what it is and most are unprepared, according to a survey by professional services firm PwC.

The survey of 300 businesses in 13 European countries found that just 40 per cent were familiar with the bloc’s overarching plan to move to net zero carbon emissions by 2050, while only 49 per cent considered their organisation prepared for “the expansive new requirements” involved.

“Companies will need comprehensive, long-term, transformational efforts to respond, including identifying and capturing reliable data to support reporting,” the survey said.

PwC found that while a majority of companies are taking action to become more sustainable – for example, two-thirds have already earmarked capital to invest in becoming more sustainable over the next three to five years – the investment was being conducted on an ad-hoc basis rather than as part of an integrated plan.

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The survey found that a significant number of enterprises were making sustainability improvements to buildings, equipment and manufacturing processes. This includes 70 per cent of companies that are using clean energy “at scale” to power operations.

In addition, almost half of respondents said their company was actively working to reduce their carbon footprint, and one-third said they were compensating for their carbon emissions with sustainability initiatives.

The EU’s plan includes more than 1,000 new taxes and related measures designed to fund it and incentivise climate action.

PwC’s survey unsurprisingly found larger companies with specialist tax and finance teams and well-resourced research and development (R&D) and sustainability departments feel better informed and prepared for the coming challenges.

Imports

It suggested the provision with the greatest potential impact was the proposed carbon border adjustment mechanism (CBAM), which will apply to certain carbon-intensive imports.

Under the proposed CBAM, EU importers would essentially buy carbon certificates corresponding to the carbon price that would have been paid had the goods been produced under the EU’s carbon-pricing rules.

David McGee of PwC Ireland said: “The lack of familiarity with the Green Deal in our survey reflects that a majority of companies aren’t fully prepared and coordinated across their business to adapt most effectively to the coming changes.

“Most companies taking action on sustainability initiatives are doing so in a piecemeal fashion. In Ireland, based on our experience with clients, we see the same lack of knowledge and preparedness for the EU Green Deal.”