Why US CEOs Rank Climate Resilience, Water as Top ESG Issues

Steve Odland: Welcome to C-Suite Perspectives, a signature series by The Conference Board. I'm Steve Odland from The Conference Board and the host of this podcast series. And in today's conversation, we're going to talk about The Conference Board's major C-Suite Outlook survey for 2025. 

And specifically, we're going to talk about the top-line ESG results from this survey. What are CEOs thinking about for the year ahead? Joining me today is Andrew Jones, senior researcher at The Conference Board's Governance & Sustainability Center. Andrew, welcome back.  

Andrew Jones: Thanks so much, Steve. Great to be with you today.  

Overview of the C-Suite Outlook Survey 

Steve Odland: So, Andrew, tell us a little bit about this major survey that The Conference Board has been doing for 25 years. 

Andrew Jones: Sure. So, as you say, The Conference Board's been doing this flagship C-Suite Outlook survey since 1999, where we survey CEOs and C-Suite executives across the globe to identify the most critical issues that they face and the strategies they're developing to meet them.  

So our latest survey was conducted in November. It was actually conducted after the US elections, and it asked over 1,700 C-Suite executives and board members globally, and that included over 500 CEOs, for their views on the issues and events that they expect to significantly impact their business in 2025. And obviously, today, we're talking specifically about the ESG-related questions within this survey where we, as you can imagine, we asked various questions around the key external issues, the key environmental and social priorities, some really interesting findings.  

Understanding ESG: Definitions and Importance 

Steve Odland:Yeah, so not everybody knows what ESG stands for. Just hit that for a second. What is ESG? What does it mean to our corporations in America? Why is it important?  

Andrew Jones:Yeah, sure. So ESG stands for environmental, social, and governance. And it's obviously, it's one of those acronyms that has many meanings to many different people, but typically it refers to a framework for assessing a broad range of nonfinancial factors—so environmental, social and governance factors that influence corporate decision making and shareholder expectations. 

The term itself has its origins in the investor and financial community, based on the sort of idea that, when investors are choosing companies to support, that they should not only focus on financial performance, but also on nonfinancial factors. And a strong conviction from doing so can enhance shareholder value and business viability. 

And obviously, the ESG field and terminology has evolved in many ways since then, but typically, it still has this sort of strict focus on a holistic view of financial performance.  

Steve Odland:Yeah. And governance is the way that companies are run, or governed, by their boards of directors and the senior management teams, and how they work within the regulatory framework set out by the listing standards of the various stock exchanges, as well as the various regulatory agencies, including the SEC. 

So all of that is highly regulated and directed. And so, ESG has to work within that framework. All right. So with all of that, we're back to the survey.  

Top ESG Issues for CEOs in 2025 

Steve Odland: What are the big issues? What are the big top-line issues in ESG for our CEOs in 2025?  

Andrew Jones: Sure. So, I'll start with one of our really big questions. 

So we asked CEOs and C-Suite executives around the world to identify the top external ESG issues that they think will impact their business in 2025. So, you can imagine, there'sa long list of potential choices there, a long list of potential factors, but two consistently ranked near the top, and that was climate events and sustainability.  

Climate Events and Sustainability 

Andrew Jones:So by climate events, we mean disruptive occurrences—that might be extreme weather, wildfires, disasters driven by climate change. And by sustainability, we mean the more sort of long-term strategic integration of ESG into business practices. So globally, CEOs ranked sustainability as number one and climate events at number two. Sort of similar finding in Europe. American CEOs actually ranked climate events at number one and sustainability at number two, and CEOs in Asia reported similar findings. Soit's very much, these two are very much top of mind this year.  

Steve Odland: And that's striking, Andrew, because the range, as you said, the range of topics that they could have raised under the ESG umbrella—go everything from shareholder rights and governance the staggered boards, all the things that used to be the focus of governance folks—but to see these, it's really broad. And so these two issues bubbling to the top suggest that, yeah, the Paris accord and COP conferences and all of that are important, but they really have filtered down into the management and the governance of corporations. 

Andrew Jones: Yeah, I think really nicely put, Steve, that.Yeah, as you said, there's so many choices, but to see this kind of consistent ranking, I think it reflects the sustained momentum in the last few years, and I think it also reflects perhaps the sort of the operational realities that companies are facing, right? 

Particularly when you look at climate events, when we know extreme weather events are increasingly disrupting manufacturing, they're halting logistics, they're disrupting supply chains and infrastructure. I think we're seeing that all kind of bubble up as a higher-priority risk. 

And interestingly, when looking at some of the disclosure data from US public companies last year, over 80% of S&P 500 companies and, interestingly, over 60% of Russell 3000 companies reported climate change as a risk factor. And that's up significantly from just a few years earlier. 

So I think we've definitely seen that sort of a mainstreaming of this concern in the last few years.  

Steve Odland:Yeah. So this isn't just a bunch of left-wing CEOs saying, "Hey, we want to focus on this." These are 1,700 respondents around the world, and CEOs and boards of directors need to focus on multiple constituencies—customers, employees, owners, community environment. And so across all of those stakeholders, across all the issues that boards and CEOs have to think about, these are the issues that really bubble up. And it's stunning on one level, but really heartening that people are taking this seriously. But sustainability in these events, as you say, impact the operations and the costs for companies.  

Andrew Jones:You're so right. And yeah, I think you're right on the one hand, it is fascinating to see the consistency in responses, particularly around the globe, right? All these different geographies. But then, as you say, perhaps it's not surprising when you look at the increasing threat of climate, both in terms of extreme weather events and longer-term changes. So, yeah, I think it is heartening to see in that regard the sustained corporate focus.  

Steve Odland: How much of the—let's just take climate events and sustainability, they rank the highest. How much of this is risk prevention? In other words, they're tired of getting their operations knocked off by tornadoes and floods and typhoons. How much of it is risk-oriented versus cost-oriented versus societal pressure? 

Andrew Jones: This is a really good question. And I would say, I think if we begin with climate events, and climate disasters and extreme weather events, my feeling is that is strongly driven by a sense of risk, right? And with that, the potential cost, right? We know that climate events are becoming more frequent. They're becoming more impactful in many parts of the world, including the US.  

We know that these pose direct and potentially catastrophic risks to business operations, supply chains, and financial performance. So I think there's a strong risk management perspective here that is also linked to an understanding of the potential costs to the business. 

But I think when we also look at the strong focus on sustainability, obviously, I think that ranks so highly because it addresses the evolving expectations of stakeholders—that's consumers, employees, investors, regulators—for enhanced environmental and social responsibility and does offer a potential pathway to long-term value creation by reducing inefficiencies, lowering costs, unlocking new revenue streams. 

I think to answer your question, I think it's a bit of all of the above, right? I think there's a lot of different considerations and a lot of different stakeholders, but I do think risk and cost are front and center here, particularly for US CEOs thinking about climate events. 

Steve Odland:Yeah, it's interesting, when I listened to you, It's really categorized as "need to do" versus "nice to do" change, . When we first started hearing about sustainability and environmental issues from corporations, it was all pretty much "nice to do." It was, let's be a good citizen, and,let's clean up our pollution, all of which is great, but this is really a need to do. This evolved from just something on the fringe to really core in strategy.  

Andrew Jones: Yeah, And I think you see that play out in just how mainstream it's become, particularly for the larger public companies, to have a climate change policy, to be disclosing extensive emissions and climate-related risk, to be taking action on not just climate emissions policy, but also biodiversity, nature. I think it's become a much more mainstream practice.  

And there are obviously clear reasons that, as you say, Steve, it's not just because it's nice to do or it's the morally right thing to do. There is a clear enhanced perception of risk and also, at the same time, perhaps, opportunity for advantage, for differentiation, as well. 

Steve Odland:Yeah, opportunity for new business models, opportunity for services, on and on.  

Regulatory Environment and Disclosures 

Steve Odland: Now, one of the areas that we talked to our respondents about was the whole regulatory environment and what disclosures are required through those regulations. Talk about that because that's a big focus, too.  

Andrew Jones: It is, and I'm sure as many of our listeners know, regulations and disclosures have become a really big, heated issue in the corporate ESG landscape, right? And that reflects how we're currently seeing a global shift from voluntary to mandatory sustainability reporting in many jurisdictions. And Europe is very much leading the way in that regard.  

There'svery ambitious initiatives like the Corporate Sustainability Reporting Directive, which once implemented, will require many public and private companies, both within the EU and globally, to report on a really broad range of ESG topics. 

And we see that emphasis reflected in our survey findings, where actually, European CEOs rank regulations and disclosures as a top two ESG concern for this year.So regulations are very much top of mind. Interestingly, in the US, not quite the same emphasis. US CEOs and executives actually rank disclosure concerns a little lower. 

I think that, in part, reflects that the US has a slightly more fragmented or inconsistent landscape . As you may know, the SEC did propose enhanced climate disclosure rules that, if implemented, would require all public companies to report on their material climate risks, their emissions. Those faced various legal challenges and are probably unlikely to be enacted, although it's worth pointing out that California has actually passed quite ambitious climate disclosure laws that will, in practice, apply to many US companies. 

Soit's a more fragmented picture in the US, but for sure, regulations and disclosure are top of mind for many CEOs and many C-Suite executives.  

Steve Odland: Now, this whole area, this regulatory area used to be thought of as focused in Western Europe. The green parties have pushed it, particularly in France and Germany, over time. But as you're saying, the regulatory environment in the United States has changed pretty materially in the last decade or so, half-dozen years. And it is further complicated by this 50-state set of regulations on top of or aside to the federal regulations. Soit'svery complex. And I think that's what we're hearing from our CEOs is the complexity of this environment. 

Andrew Jones: Yeah, really nicely said.I think the US is, it's particularly complex. I think a lot of corporate leaders, whether they're CEOs or your sustainability leaders, CLOs, it's definitely a difficult balancing act to tread the line between your state-level regulations that may vary significantly from state to state, while also monitoring these emerging international regulations that in the EU that often have extraterritorial reach. 

It's a challenge, right? And similarly, it's a challenge for sustainability leaders to try and avoid falling into that sort of compliance mindset and still try and really leverage sustainability for the competitive advantage for the business.  

Global Perspectives on ESG 

Steve Odland: Now, outside of Western Europe and the US, what are you hearing from CEOs? Because Asia has always been thought of— let's just think of the two large economies of China and India—that they don't care about the environment, they don't care about, there's no regulation, they can do whatever they want, pollute the rivers, manufacturing, without standards. Therefore, it's really cheap, so let's just move the world's manufacturing there, and stick our heads in the sand.That's changed.  

Andrew Jones: It has. And actually, it's a really great question because what we're seeing is quite a consistent picture globally. So, CEOs in places like India, Japan, China, reported quite similar findings in the sense that climate events, sustainability, regulations, and disclosure, these are still ranking really high. These are still top of mind.  

I think that speaks to several sort of factors, but I think it does reflect an increasing focus on sustainability, a recognition of its business advances. It also reflects that the regulatory environment is evolving in these jurisdictions, too. You may have seen that China has actually introduced quite ambitious sustainability reporting regulations. Soit's interesting how these trends are, obviously have their national and regional variations, but they'reactually very international, as well and quite consistent across the board. 

Steve Odland:We're talking about the ESG results from The Conference Board's major C-Suite Outlook survey. We're going to take a short break and be right back. Welcome back to C-Suite Perspectives. I'm your host, Steve Odland, from The Conference Board, and I'm joined today by Dr. Andrew Jones, our researcher at The Conference Board's Governance & Sustainability Center. 

So, Andrew, you are an expert at all of these ESG areas, you've been studying them and writing about them and teaching about them for a long time.This survey is really interesting that we do every year. We get We've been doing this, as you said, for 25 years. There have been trends and shifts in the way CEOs and boards of directors view ESG, and really it started with governance probably, what, 20 or 30 years ago, and that was the primary focus. The E and the S parts, though—ESG is environmental, social, and governance—the E and the S parts have really been the Johnny-come-latelys. 

What are some trends that you have seen in the last few years on the E and the S, specifically?  

Environmental Priorities: Renewable Energy and Water 

Andrew Jones: Sure. It's a great question. Actually we consistently ask in our survey of our CEOs and our C-Suite executives, what are their environmental priorities, and what are their social priorities? And these do evolve and adapt over time as, obviously, broader societal trends come and go.  

This year, interestingly, globally, the top three environmental concerns for CEOs are renewable energy, carbon neutrality, and investing in the energy transition. I think this is a really interesting set of priorities, right?Because I think it does just kind of highlight an increasing shared focus on addressing climate change. And obviously, renewable energy and carbon neutrality are perhaps tangible actionable ways for companies to contribute to global climate goals. And then, similarly, the emphasis on investing in the energy transition perhaps demonstrates that CEOs are not just adapting to change, but actually actively driving it. 

But what's really interesting here, Steve, is there is a regional divergence in environmental priorities.So while European and Asian CEOs align quite closely with that global emphasis on energy, on carbon, on the transition, US CEOs actually diverge. And in the US, climate resilience and water rank as the top two concerns. And they've both really gone up the list from previous years. Water, in particular, was actually quite low down as recently as last year. Soa very interesting picture, particularly in America.  

Steve Odland:it's interesting. We think of some of these issues on energy as being, "Well, it's been around forever." It's hard to believe that electricity use broadly in homes and manufacturing is only a phenomenon of the last 125 years or so. I n the course of human existence, it's a fraction of a second. And so, you think of these things as, "Oh how would we ever change it?"  

Well, it wasn't even here 125 years ago. And then we started, if you go back to an agrarian economy, we're burning wood. And then in some countries, we're burning coal because we were able to dig that out of the ground, or peat, in some areas, so natural sources. And so this whole thing has evolved enormously rapidly. I mean, you have to put it in the historical context to realize how much evolution has there been. So when you start thinking about evolving energy production to renewable sources, including nuclear, it'snot unthinkable. It is not unheard of because we've been doing it. for the last 125 years.  

Andrew Jones:You're so right. And it's such an interesting point, because obviously, so much of the modern global economy that we recognize is obviously constructed on the consumption of fossil fuels and particularly, of course, of oil. 

But then when you look just at the last few years, the manner in which so many renewables have rapidly scaled and come down in price to become quite cost effective and competitive. The scaling up of solar, in particular, has been phenomenal. So I think you're right that, on the one hand, it's often hard to imagine an alternative, but I think the energy transition is underway—globally, that is, underway. And what exactly that looks like in different industries and different geographies is still under debate and obviously, it won't be a straight line, there'll be sort of falls and peaks and troughs, but it is underway, and CEOs and companies are key drivers of it. 

Steve Odland: Well, and there's broad recognition now, and give credit to companies for adopting, but there's broad recognition that there needs to be a change, that we need to move towards carbon neutrality because we are impacting the climate by burning fossil fuels. All of this has been recognized, and people are working on it and adopting these things—mostly voluntarily—in some cases not, but mostly voluntarily. So these energy aspects are really top of mind. In that bigger context, it's important.  

Any other environmental priorities?  

Andrew Jones:Yeah, so as I mentioned, the US CEO picture is slightly different, where carbon and energy transition still rank high—and I should add, they're still high priorities—but actually at number one and number two this year for US CEOs was climate resilience and water. And I think this is so interesting. Both have come up the list a lot from previous years.  

And I think the focus on climate resilience perhaps goes back to our earlier discussion around climate events. Particularly when you look at the US is facing increasing numbers of extreme weather events and climate disasters with increasing losses. Obviously, those ongoing disruptions have heightened awareness of climate as a material business risk. I think we expect to see more US companies prioritizing infrastructure resilience, integrating climate risk into strategy in the year ahead.  

I think the focus on water is particularly interesting given how much it's come up the list for American CEOs. And I think there's many ways to interpret this. We perhaps see it as a recognition of growing operational risks linked to water scarcity, perhaps particularly in certain arid regions. So, we expect to see a heightened focus on water for many. companies in their ESG strategies in the year to come.  

Steve Odland:Yeah, it's water supply. I mean, what's going on in Southern California, they've run out of water, the hydrants run dry, which is a problem when you're trying to put out fires. 

But it's also quality. And then you have the whole infrastructure around pipes and 100-year-old lead pipes or older pipes. Soall of these things, but you say, OK, well, what does that have to do with companies? Well, it impacts manufacturing and the quality controls and manufacturing costs, the ability to manufacture in certain areas, on and on. 

So the fact that it's top of mind for CEOs is not unidimensional in what they're thinking. There's a whole lot of different facets to it.  

Andrew Jones: Agreed. And as you say, I think it just reaffirms it. Yes, so many companies rely on, as you say, clean, reliable water supply for manufacturing, for energy production, for agriculture, and therefore making water use and effective water management kind of a key part of the operational resilience—particularly, as you say, in certain regions, particularly the Southwest.  

Yeah, definitely, we're expecting Increased scrutiny of corporate water use, and with that, perhaps a heightened focus on water. I should add that many US public companies have made really significant progress on water consumption in last years. And again, that's a voluntary initiative, right? But the median total water consumption of the Russell 3000 companies has declined a lot in the last few years, and I think that kind of reflects the advancement of sustainability efforts and a real heightened focus on efficiency, consumption, and real tangible progress that should be celebrated. 

Steve Odland: And this highlights the need for public-private interaction here, because you get to the question of who owns water, right? Is it a public—is it owned by the government? Is it owned by the public? Is it owned by private sources? And the answer is all the above, and they're crossing jurisdictions and so forth, but there needs to be greater coordination here because it's not an infinite supply, and the demand, particularly geographically, far outstrips the supply. 

And you have to balance industries. There are national security issues at play when we have national security firms involved, you've got to deal with that. Food is a national security issue. And we still have agriculture. Even though we're not an agrarian society, we all need to eat. And so that production is pretty important. And then, you need water to sustain life.  

So all of these things are in balance. and, of course, become acute when there are shortages. And that's, I think, what we're seeing from our CEOs.  

Social Concerns: Economic Opportunity and Education 

Steve Odland: Now, the other piece of it is the S in ESG, and those are the social concerns we've rocked and rolled through some big social upheavals in the last half a dozen years. 

What are we hearing from CEOs on the S, social concerns?  

Andrew Jones:Yeah. So some really interesting findings. Actually what we found is consistent from the last few years: Economic opportunity and education top the list of social priorities for CEOs, both in the US and globally. And I think this is really interesting. And I think it speaks to obviously, much broader trends and factors and developments in the broader business and societal landscape.  

Obviously, economic opportunity reflects companies' inherent role as economic engines and supports workforce development, community wellbeing, business growth, and education. Similarly, I think remains a cornerstone of corporate social priorities because it underpins workforce readiness, innovation, upskilling, which has taken on so much importance in the context of enhanced focus on human capital, enhanced focus on talent acquisition and retention. So these two continue to top the list of social priorities. 

Steve Odland: And AI, of course, is right in there in terms of the big trends that are hitting us. We've heard that in the survey over and over again.That's not directly linked to ESG, but when you're thinking about the social aspects of that skill set displacement and so forth from AI and opportunities from AI, it does hit the S part of ES, and G even. 

Andrew Jones: It really does. And I think we would expect to see in the years to come an enhanced focus on AI. Both in the traditional kind of governance sense, but I think also, as you say, the attending to the unforeseen or foreseen social implications of the uptake of AI. As you say, perhaps the displacement of certain jobs roles, certain industries, the impact that has in certain communities, that the potential for harming already marginalized communities. 

So I would expect to see AI take on a much more central role in ESG from all three areas: E, S, and G. I think it'sdefinitely a development to expect. And I think the focus on education again reflects that, right? That we would expect to continue to see this investment in STEM, this investment in the jobs of tomorrow. AI is a critical part of that picture.  

Steve Odland: And you said something really quickly—you talk really quickly— you said something really quickly that I just want to make sure people heard, which I think is so important. It's equality of opportunity. People conflate equality of outcome with equality. You said "equality of opportunity," and that should be the primary focus. Make sure that there's a level playing field that people have access and the opportunity. And then choice, allow personal choice to come into play here. And that's where The Conference Board has been over time.  

The last thing you hear about is DEI, and that's typically thought of as a human capital area, but it is ESG, too. It's a social area. And all of a sudden, DEI is a dirty word. But when you talk to all the players and the critics and the proponents of DEI, the objectives have not changed and the consistency and the commitment to objectives.  

So it usually comes back to the Supreme Court decision on Harvard and quotas and all that, which I call the tactical aspects of it. But still, the objectives of trying to make sure that we've got an inclusive society, that companies have an environment that fosters belonging, all of those objectives are consistent and part of what we're hearing from CEOs on their social priorities.  

Andrew Jones: You're really correct, Steve. And yeah, I think we all recognize that the landscape for DEI has evolved in the last year, quite significantly in some ways, and a lot of companies are recalibrating their strategies and their terminology and their messaging. 

But clearly, the underlying commitment to fostering inclusion, to ensuring that there is a workforce that is representative of both broader society, wider communities, the customers we serve, remains intact. I think that commitment is obviously closely aligned with broader business value and long-term value-creation considerations. And we see that play out in our survey, that actually gender equality has consistently ranked high among CEO social priorities and continues to do so and continues to be so globally.  

So it just reflects how companies remain focused on increasing women's representation in leadership, narrowing the pay gap, breaking some systemic barriers to advancement. So yes, we continue to see that focus, even though perhaps DEI itself, in terms of how it's framed and conceptualized, might be evolving and will continue to evolve in the year ahead.  

Steve Odland: Andrew, any last thoughts or any other points that we missed in our conversation?  

Andrew Jones: I mean, we had a very wide-ranging conversation, Steve. 

I really enjoyed it.  

Corporate Governance and Final Thoughts 

Andrew Jones: I would just add perhaps a final note on G and corporate governance. Obviously, there's sometimes a tendency to approach ESG as separate silos, but actually I think at The Conference Board, corporate governance is fundamental to all aspects of what we're talking about here. Because it establishes the framework within which a company identifies and integrates ESG considerations. And more fundamentally, the board and the C-Suite obviously set the tone for corporate strategy. So I just add that we also expect to see an interesting year ahead, I think, in the governance space as boards continue to evolve, navigate uncertainty, and oversee the implementation of AI, and continue to promote , as we discussed, diversity and inclusion across the organization.  

So I think it's going to be an interesting year for all aspects of ESG, both in the US and internationally.  

Steve Odland: Dr. Andrew Jones, thanks for being with us today. 

Andrew Jones: Thanks so much, Steve. It was a pleasure.  

Steve Odland: And thanks to all of you for listening in to C-Suite Perspectives. I'm Steve Odland, and this series has been brought to you by The Conference Board.