Australian bosses say the climate crisis is the biggest challenge facing their businesses – in contrast to their overseas counterparts, who have ranked recovering from the Covid-19 pandemic their top concern.

“Climate change impacts” were rated the No 1 concern by 18% of 155 Australian executives surveyed by accounting firm Ernst & Young, followed by technological disruption (17%) and “the continuing Covid-19 pandemic” (15%).

Globally, the positions of climate change and the pandemic were reversed, with the pandemic considered the biggest challenge by 18%, the economy second with 12% and global heating a distant third at just 9%.

“We think this reflects both the fact that locally the pandemic has been handled comparatively well and also our C-suite consider Covid’s impacts to be short term,” EY’s managing director of strategy and transactions, David Larocca, said.

“It also reflects the priority position investors are now giving sustainability and climate change when making their decisions.”

Over the past few years investors, including large superannuation funds, have ramped up pressure on boards and executives to commit the companies they lead to cut greenhouse gas emissions.

In response to investor pressure, Australia’s two big miners, BHP and Rio Tinto, have said they will attempt to reduce their emissions to net zero by 2050, while major banks ANZ and NAB have committed to reducing or eliminating their funding for coal projects.

The election of Joe Biden has also increased pressure on Australia and its corporate sector to do more on climate.

Biden has recommitted the US to the Paris agreement, which aims to limit global heating to 1.5c by 2050, and his environmental envoy, John Kerry, has said that the two countries are not on the same page and “coal has got to phase down faster”.

Mathew Nelson, a climate change and sustainability executive at EY, said that despite the progress made so far, there was “still a long way to go to educate Australian corporates about the opportunities associated with achieving net zero emissions”.

“While the market is increasingly alert to the economic upsides of decarbonisation, in the near term Australian businesses are acknowledging that the economic reorganisation required to achieve net zero will create losers as well as winners, and time is running out to ensure you are the latter.”

He said EY research also showed that investors were increasingly unhappy with the quality of the data companies gave them on their climate performance, “despite an increasing demand to understand climate risks in portfolios and companies”.

“This mismatch should be priority number one for the capital markets ecosystem in the years ahead,” he said.

The EY survey, conducted as part of its annual capital confidence barometer, received responses from 155 Australian executives and 2,515 globally.

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