This week’s topics:
A year since the first lockdown - reflections from our UK Chairman
UK climate findings from PwC’s CEO Survey
How companies can develop an ESG framework
Tax Day summary
Reflections on a year since the UK’s first lockdown
Kevin Ellis, PwC UK Chairman and senior partner, said:
Going into lockdown this time last year was a momentous change for every person and business. I said then that our decisions would be centred on supporting our people and protecting jobs, both in our organisation and beyond.
Since then we’ve welcomed more than 3,250 people including over 1,300 graduates and over 550 students directly from school or college.
I’m conscious many of our new joiners won’t have stepped foot into one of our offices yet. As lockdown eases and we move to hybrid working, I’m keen to ensure they get more opportunities to build their networks and learn from others. It's crucial that the generation starting their careers during the pandemic are not disadvantaged over the longer term. Our surveys show our people value a mix of home and office working. Once the stay at home order lifts, we will be widening access to our offices on a voluntary basis for those who have a business or personal need to return. We’ll continue to follow Government guidelines closely - a safe return to the office is crucial in ensuring the wider economy recovers sustainably.
UK CEOs signal surge in green investment and greater commitment to measuring and reporting on climate
Commenting on the UK climate findings of PwC’s 24th CEO Survey, Emma Cox, PwC UK Head of Purpose, said:
“Climate has become a fundamental business issue, and CEOs recognise they need to step up. Companies are starting to transform their business models, supply chains, products and services. This is driving investment, better measurement and reporting of environmental impacts, which should in turn fuel further action.”
The survey finds that the majority (60%) of UK CEOs plan to increase their long-term investments in sustainability and ESG initiatives over the next three years, and more than half believe they should still be doing more to measure (51%) and report (53%) the environmental impact of their business.
Some 43% said they explicitly factored climate change and environmental damage into their strategic risk management activities.
70% of UK CEOs are concerned about the impact of climate change, with almost a third (31%) extremely concerned about the issue (up from 24% last year).
However, climate change still only ranks ninth among UK CEOs’ perceived threats to growth, with 29% of UK CEOs saying they are “not concerned at all” or “not very concerned” about the issue. When it comes to 'extreme concern', climate change jumps up the list of threats to fourth position in the perceived list of threats for UK CEOs' growth prospects.
Almost half (49%) of UK CEOs think reducing climate change and environmental damage should be a top three government priority, compared to 34% globally and 50% said it should be a top three UK business priority (34% globally).
However, the confidence isn't quite there yet. Only 45% of UK CEOs believe it is likely that the government's recovery plan will effectively balance short-term economic needs with long-term environmental goals, while 33% believe it is unlikely that the recovery plan will achieve this.
ESG and growth: A new way of thinking
Strategy&, part of the PwC network has released a paper, titled ESG and Growth: A new way of thinking, to help companies think about, and put in place, their ESG strategy.
Christine Korwin-Szymanowska, Strategy& partner, said:
Despite a growing and significant body of business literature on Environmental, Social and Governance (ESG), it remains an area many executives are still grappling with. ESG began as an investment-related concern, informed by complex risk metrics. However, the increase in prominence of ESG means that CEOs now must engage with the topic and consider how to incorporate it into their corporate strategy.
ESG has seen a dramatic acceleration of interest in the past 12-18 months with the awareness of how companies impact the environment and society heightened. This is reflected in a PwC survey of UK consumers that found 67% of respondents reported ESG considerations are important for them
ESG provides an umbrella framework to consider a company’s impact and dependencies on the environment and society, as well as the quality of its corporate governance.
Our latest article offers a new framework for leaders that helps bridge the gap between strategy and the more technical aspects of ESG, and put in place business initiatives that address ESG while also identifying growth opportunities. Companies should think through the three elements of ESG separately, rather than as a whole.This allows them to identify more concrete actions, prioritise these based on impact and return on investment, and decide how to align ESG efforts to their corporate strategy.
This could include updates to corporate strategy, changes to operating models to embed action on ESG (including net zero), identification of improvements in supply chains, and assistance in responding to regulatory and reporting requirements.
Businesses also need to address the crucial question of their level of ESG ambition, on each ESG component, against the expectations of those stakeholders who matter most to the long-term viability of their businesses.
What did we see on “tax day”?
On Tuesday, the Government published a raft of consultations, many aimed at simplifying and increasing digitisation of the tax system.
Marissa Thomas, head of tax at PwC, said:
The consultations published this week underline the Government’s desire to make better use of technology, not only to simplify the tax system but also to help close the £31bn annual tax gap.
The current tax administration system is made up of a patchwork of different processes - almost every area of tax has its own set of rules. The challenge now is to unravel decades of tweaks and changes, which have each added their own layer of complexity.
There is an opportunity to bring real simplification and modernisation, which will benefit both HMRC and taxpayers. It won’t be easy to deliver that simplification, but if HMRC work closely with the taxpayer and professional communities, it should be possible to develop a framework which works for all parties and builds on the technological changes which we are seeing.
Something to watch: PwC Wales The Ethical Hacking team in Wales have shown you how to keep your home secure on BBC XRay. Consultants Chloe Seaton and Huw Davies talked to Steffan Powell about how easy it can be to hack into the modern home. Catch the episode on demand on iPlayer: https://bbc.co.uk/iplayer/episode/m000tl8k/xray-series-20-episode-16
Something to read: In PwC UK's latest IFRS17 blog, Katie Paton shares six considerations to help your finance function prepare for dry runs and transition. The change is more than numbers; it's about your people and future ways of working. Read more here: https://bit.ly/30VqSXW
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 155 countries with over 284,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2021 PwC. All rights reserved
Manager, Corporate Affairs, PwC United Kingdom
Tel: +44 (0)7483 329628