Key findings
- 44% of sustainability decision-makers name climate change and decarbonisation as a top-three strategic challenge for their organisation.
- 56% leave it out.
- Input, energy and raw material costs (36%) and regulatory burden (30%) are next.
- Where climate ranks predicts what follows: 58% of those who put it in their top three fund it above 5% of CapEx, against 30% of those who don't.
What are the biggest strategic challenges for organisations?
Among sustainability decision-makers, climate comes first, though without a majority. Asked to choose up to three challenges for the next 12 months, 44% select climate change and decarbonisation.
Costs and rules follow. Input, energy and raw material costs are chosen by 36% and regulatory and compliance burden by 30%. A quarter name tariffs, trade and geopolitics (25%) and weak or uncertain customer demand (24%).
Climate tops the list for climate leaders, but not by much
Which of the following do you consider the most significant strategic challenges facing your organisation over the next 12 months? (Select up to three)
Respondents could choose up to three, so figures total more than 100%.
View data
| Answer | % |
|---|---|
| Climate change and decarbonisation | 44% |
| Input, energy and raw material costs | 36% |
| Regulatory and compliance burden | 30% |
| Tariffs, trade and geopolitics | 25% |
| Weak or uncertain customer demand | 24% |
| Supply chain disruption | 20% |
| Adopting or competing with AI | 17% |
| Access to capital and cost of finance | 17% |
| Labour shortages and skills gaps | 16% |
| Cybersecurity | 11% |
| Attracting and retaining talent | 11% |
How many climate leads don't see climate as a top challenge?
More than half. 56% of the people who hold or influence sustainability decisions left climate out of their own top three.
That is not a judgement on them. They were asked about the organisation's challenges, and they answered accurately. In most businesses, cost, regulation and demand are more pressing.
Most climate leads don’t put climate in their organisation’s top three
- Climate in their top three 44%
- Climate outside their top three 56%
View data
| Answer | % |
|---|---|
| Climate in their top three | 44% |
| Climate outside their top three | 56% |
Does it matter where climate ranks?
It predicts everything else. Among organisations where climate is in the top three, 58% fund it above 5% of CapEx. Where it isn't, 30% do.
Governance shows the same split in reverse. 14% of organisations with climate in the top three have no climate governance at all. Among the rest, it is 42%.
Where climate ranks predicts whether it is funded and governed
View data
| Answer | % |
|---|---|
| Funds climate above 5% of CapEx: Climate in top three | 58% |
| Funds climate above 5% of CapEx: Climate outside top three | 30% |
| Has no climate governance at all: Climate in top three | 14% |
| Has no climate governance at all: Climate outside top three | 42% |
What this means
Climate work gets funded when it is seen as a business challenge, and stalls when it is seen as a sustainability project. The ranking question is a quick test of which one you have.
For sustainability leaders, the job is often translation. The three challenges that outrank climate for most organisations are cost, regulation and demand. Energy efficiency is a cost argument. Disclosure is a regulation argument. Customer requirements are a demand argument. The case is stronger made in those terms.
The same pattern shows in our UK research with general business leaders, where climate and physical risk is last of ten factors shaping long-term plans.
Frequently asked questions
Is climate change a top business priority?
For a minority. 44% of sustainability decision-makers name climate change and decarbonisation as a top-three strategic challenge for their organisation, according to The Reality Department.
What do sustainability leaders see as the biggest business challenges?
Climate change and decarbonisation (44%), input, energy and raw material costs (36%) and regulatory and compliance burden (30%).
Does prioritising climate lead to more funding?
Yes. 58% of organisations that rank climate in their top three challenges fund it above 5% of CapEx, against 30% of those that don't.
Methodology
The Reality Department surveyed 500 sustainability decision-makers: 250 in the United States and 250 in the United Kingdom. Fieldwork: August 2026. Respondents could choose up to three challenges.
Related: How many companies are funding their net zero targets?
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