According to PricewaterhouseCoopers’ annual survey of more than 1,000 CEOs, 40 per cent expressed concern about the threat posed by climate change globally. Moreover, CEOs in the Asia-Pacific region are the most concerned, with 58 per cent worried about the risks. Just 18 per cent of North American CEOs have concerns.

However, in Australia, despite early moves by firms including Westpac and Insurance Australia Group to address sustainability and climate issues, the trend towards embedding these into risk management strategy remains immature.

“There is no doubt that changes in the political climate will put it [climate changes] on the agenda for companies this year,” said Gary Anderson, managing director at Protiviti. “In reality though, I expect fairly slow progress.”

Part of the problem, Anderson added, is that addressing climate risk issues remains a cost centre, whereas other areas of risk management are paying business dividends. “The reality is that active risk management and associated actions to address these sustainability and climate issues will generally be a cost to most companies, a net cost,” he said.

“So, while it is good to start from a risk management perspective, if companies really adopt this completely it will typically involve undertaking some activities that will incur a net cost. I think initially many companies will want to consider it and be recognised for addressing it from a positive PR aspect, but the reality is, from what I understand, it is a net cost to most companies.”

However, there is increased discussion of the issues, and in the long term, observers expect significant action on sustainability and climate change.

“If you listen to the discussion around groups of CEOs and non-executive directors, the discussion is a lot more vigorous and the topic comes up a lot more than it did a few years ago,” said Craig Jackson, Oceania leader for risk advisory services at Ernst & Young.

“So, therefore, I think it will get increased attention and focus. I’d say currently there’d still be question marks as to whether it’s worth the investment. But I’ve got no doubt it will get to a point where it’ll become such a fundamental issue that you need to report on, that you need to demonstrate that you’re across [it]. Therefore, you can’t ignore it.”

Stuart Fagg is the Editor of Risk Management magazine, Lawyers Weekly’s sister publication. See riskmanagementmagazine.com.au