Financial Services CEOs will accept reduced profits in support of environmentally sustainable investments reports PwC. According to the 27th annual PwC CEO Survey, 36% of CEOs said that investing in nature-based climate solutions was in progress. A further 5% have completed such a transition according to the survey.

PwC reports that a significant proportion of firms have taken demonstrable steps to aid in the ongoing climate transition. This is despite the backdrop of withdrawals from broader ESG mutual funds. And continued market challenges from high interest rates and the difficult macroeconomic environment.

Seizing the opportunity to lead in creating a sustainable future

Isabelle Jenkins, Leader of Financial Services, PwC UK, said: “The industry’s pivot towards sustainability is not just about mitigating risks. It is about seizing the opportunity to lead in the creation of a sustainable future.

“Financial Services faces possibly one of its most significant challenges. That is, how to align portfolios with the net zero transition and create a positive effect in global markets without jeopardising returns, and many of the world’s biggest firms are still unsure how to navigate this shift.

“However, our research shows that firms are seeking a smooth transition to decarbonisation. They are using portfolios to balance climate-related goals with their duty to meet performance targets.

The willingness to accept lower returns for climate-friendly investments is testament to the sector’s commitment to making a positive impact. Continued consistency and clarity from policymakers are vital if firms’ decarbonisation efforts are to make effective change.”

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Some 19% of FS CEOs acknowledge that, in the past five years, climate change has been a significant driver to a large or very large extent. Looking ahead, with an emphasis on proactive planning for the next three years, 30% expect climate change to be a major influence on their strategic adjustments for value delivery and capture. These percentages reflect the proportion of respondents forecasting that climate change having a large/very large impact on their business strategies.

UK green skills gap

Finally, just under half of firms are focusing on enhancing the skills of their existing workforce. The finding comes as the UK’s financial services sector faces an emerging green skills gap. That is according to research from PwC’s Green Jobs Barometer, launched late last year. The report was released in collaboration with the Financial Services Skills Commission (FSSC) and the Aldersgate Group. It found that the proportion of job vacancies in the sector that are identified as green increased from 0.26% in the 2019-2020 timeframe to 2.2% in 2022-2023. That represents a rise from a total of 4,900 jobs to 16,700. Given the scale of the green investment needed to meet Net Zero goals, PwC expects this growth to accelerate.