A recent study has revealed that companies based in the European Union (EU) are significantly more likely to identify climate risk as a top organisational concern compared to their global counterparts.
The research, conducted in part by the American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA), highlights the impact of EU regulations on climate risk management and disclosure, which appear to drive a stronger focus on climate-related risks.
The global survey, which involved 436 board members, C-suite executives, and risk managers, was developed by researchers from NC State University (US), the University of Bari Aldo Moro (Italy), and the University of Economics Katowice (Poland).
It was conducted in late 2024 with the support of AICPA and CIMA.
The research, titled “Managing the Risks of Climate Change: Insights into Business Practices,” revealed that 49% of the organisations based in the EU or with EU operations consider climate risk a top 10 organisational concern, and only 24% of firms outside the EU share this view.
It also identified that 57% of EU-based firms reported an increase in investor expectations regarding climate risks in the past two years, compared to just 28% of non-EU companies.
According to the research, only 49% of EU-based companies have established structured processes for addressing climate risk, in contrast to only 19% of companies outside the EU.
The report also indicated that 49% of EU organisations have implemented a dedicated management-level risk committee to oversee climate risks, compared to just 14% of non-EU firms.
One of the key reason for the differing perspectives on climate risk between EU and non-EU businesses is the introduction of the European Sustainability Reporting Standards, as part of the EU’s Corporate Sustainability Reporting Directive (CSRD), the survey found.
A notable positive outcome from the survey is that 25% of companies with EU operations recognised the strategic opportunities that effectively managing the risks can bring, whereas less than 10% of non-EU companies expressed the same level of appreciation.
AICPA and CIMA global head of sustainability Jeremy Osborn said: “This research study demonstrates that managing climate-related risks is a high priority for EU companies, catalysed by reporting under the CSRD.
“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.”
