Report: Companies are slowing climate initiatives due to rising costs
CEOs say delayed investments, price hikes, and nearshoring are primary tactics for dealing with inflation and market uncertainty.
Businesses are scaling back investments due to inflation, and supply chain decarbonization efforts are among the first efforts on the chopping block, according to a report from procurement and supply chain consulting firm Proxima, released March 30.
The firm surveyed 2,000 CEOs in the United States and the United Kingdom for its Supply Chain Barometer 2022, and found that the majority (91%) are experiencing inflationary conditions, with one in 20 saying their companies are seeing inflation above 10%. Nearly half said their businesses have raised prices as a result. Other tactics for dealing with the rising costs include nearshoring, delaying business investments, and reconfiguring products and services.
Sustainability investments are among the hardest-hit. The research found that 25% of businesses have had to delay their plans to decarbonize their supply chains due to inflation, and another 13% said inflation had changed their decarbonization plans altogether.
“Amid historic supply shortages and the highest inflation in decades, businesses are feeling the impact especially when it comes to their plans to decarbonize their supply chains,” according to Proxima’s Kent Mahoney, executive vice president, North America. “CEOs are working hard to adapt their plans to reduce carbon emissions, as well as calling on government to do more to help support their business.”
Other findings include:
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- 15% of CEOs said they had already acted to “nearshore” their supply chains, while another quarter (26%) said they are actively looking at nearshoring some or all of their supply chain.
- Almost half (47%) of CEOs surveyed said their businesses had raised prices as a direct result of inflation. A “significant proportion” of leaders also said inflation was forcing them to reconfigure their products and services. Close to a third (32%) said they were delaying planned business investments.
- 89% of CEOs said the government should be doing more to tackle inflation. Close to half (45%) said government leaders should be taking steps to cap energy prices for business, for example; a similar number said that the government should be actively intervening by sourcing certain goods.