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Execs stick to climate goals for now, but a weak economy could change that

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Corporate executives are worried about economic headwinds, but these concerns aren’t yet enough to knock them off sustainability goals such as slashing electricity waste, adopting alternative energy over oil and gas, or tracking greenhouse gas emissions.

That’s the findings of Honeywell International Inc.’s
second quarterly survey of corporate management. The survey queried 750 global executives that are, or function as, sustainability officers. Respondents ranged from players in heavy industry to the financial-service firms funding business operations throughout the private sector.

According to the survey, released Tuesday, sustainability goals continue to be perceived among top corporate priorities, cited by 71% of organizations as of one of their top five issues.

But the report also found uneven adoption around the globe. North American organizations appear to trail most other regions in establishing long-term sustainability goals. Organizations in Asia Pacific prioritize sustainability goals more than any other region.

The findings, which Honeywell is looking to shape into its Environmental Sustainability Index for longer-term comparison tracking, reveals that the current economic and geopolitical environment negatively impacts the ability of organizations to successfully achieve their sustainability goals. Geopolitical tensions can be largely pinned on Russia’s ongoing illegal war in neighboring Ukraine, both resource-rich nations whose fighting has roiled energy markets
and risks knocking back the global economy.

While COVID 19 pandemic-related concerns were cited as the top barrier to sustainability success in the previous report, issued in October, economic concerns and their impact are now cited as the top anticipated barrier for sustainability efforts over the coming 12 months.

The U.S. economy grew at a seemingly snappy pace late in 2022, but it appears to have gotten off to a tepid start in the new year. The first batch of reports on the health of the economy in the first quarter suggest the U.S. could even contract again. Economists who work at the nation’s largest banks see trouble ahead. They forecast GDP will be flat in the first quarter and shrink in the second quarter.

Honeywell’s report found that when it comes to meeting sustainability goals by 2030, an anchor deadline year for numerous climate-focused commitments, there is an increased level of optimism quarter over quarter across all sustainability categories. That includes energy efficiency and an evolution to fuel alternatives, such as solar, wind, nuclear or hydrogen
Sustainability officers are also targeting emissions reduction, pollution prevention and circularity/recycling of materials and end-products.

Large, publicly traded companies know that the Securities and Exchange Commission continues to iron out proposed regulations that will require uniform emissions reporting and other data, including emissions up and down the supply chain.

And to meet the changing requirements, “it’s more than just embracing technology, businesses have to change culture,” Vimal Kapur, Honeywell’s president and COO, told MarketWatch.

“It’s no longer just, I’ll swap to LED lights and that’s my energy transition. [Companies are saying] we need to change processes, we need to buy new technology and we need to change people,” he said.

More key highlights from the study include:

  • Most organizations are prioritizing energy efficiency and evolution across geographies, but other categories such as emissions reduction and circularity/recycling showed increased momentum. In fact, 50% of organizations plan to increase budgets related to emissions reduction by over 20% over the coming 12 months.

  • Companies are shifting from primarily process-driven methods for achieving goals to more balanced approaches that combine both technology- and process-driven initiatives. While most organizations focus on process change to achieve near-term goals, over 20% of organizations are using a balanced blend of process and technology with the other 15% leaning heavily on technology to achieve goals. 

Darius Adamczyk, chairman and CEO of Honeywell, said his company is in a unique position to gauge the big questions on sustainability by its customers and the business community at large considering that last year, over 60% of its annual revenue was from business lines such as sustainability software, chemical catalysts that turn old plastic into new, electric battery breakthroughs and other instrumentation geared for environmentally sound practices.

Plus, approximately 60% of Honeywell’s R&D spending was directed toward ESG innovation. ESG is a broad label that includes Environmental, Social and Governance metrics, often lauded by corporations or investment management firms as a key layer of scrutiny for investments, and increasingly in demand by investors.

Honeywell itself committed in April 2021 to become carbon neutral in its operations and facilities by 2035 through a combination of further investment in energy savings projects, conversion to renewable energy sources, completion of capital improvement projects at its sites and in its fleet of vehicles, and utilization of credible carbon credits where needed.


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