Climate Demands Board Attention When Linked To Commercial Outcomes

James Dennis, Director of Climate Risk and Decarbonisation Strategy at KPMG UK, sits at the intersection of corporate strategy and climate finance. He works with large organisations navigating the gap between climate commitments and capital allocation, and he has a clear-eyed view of where that gap remains widest. His assessment is pragmatic rather than optimistic: progress is real, but the embedding of climate risk into mainstream investment decisions remains shallow across much of the economy.

In an interview with Climate Solutions News, Dennis examines how boardroom attitudes have evolved, why scenario modelling has yet to meaningfully change strategic bets in most sectors, and what it will take for corporate capital to play a larger role in funding climate innovation. His perspective offers a frank appraisal of where sophisticated analysis is already shaping decisions, and where compliance instincts continue to get in the way.

CSN: Over the past three years, how has climate risk changed the way UK boards think about long-term investment decisions?

James Dennis: Given the prevailing economic landscape, cost reduction and resilience have become the dominant priorities in boardrooms over the past few years, and that’s changed how climate risk shows up in long‑term investment conversations. Rather than being treated as a separate “ESG” topic, climate tends to get attention when it can be clearly linked to commercial outcomes, be that protecting margins, avoiding disruption or improving business continuity.

The strongest entry point is resilience. Boards are increasingly focused on the practical ways climate can affect performance and asset value. That could be about mitigating volatility in crop yields and commodity availability; disruption to transport routes and logistics networks or physical damage to key sites and infrastructure from more frequent or severe weather events. Framed that way, climate risk becomes less about reporting and more about safeguarding returns, and it starts to influence where capital is deployed and what gets prioritised.

CSN: Are you seeing more large corporates invest directly in climate tech companies? What is driving that shift?

James Dennis: There is still sustained interest in partnering with technology providers to support the transition, and it continues to be seen as a practical enabler. That said, the level of investment is more constrained than in previous years, with a clearer focus on capital discipline and near-term delivery. As much as anything it’s about the commercial opportunities. Climate tech is a major growth area when traditional markets face headwinds. And there’s a defensive element too with some firms and investors looking to secure access to emerging technologies before competitors do.

In this environment, the strongest opportunities are where technology can unlock measurable benefits without significant upfront capital. Solutions that improve efficiency, optimise existing assets, strengthen operational performance, and reduce cost to serve are tending to win. Programmes that can be deployed quickly, demonstrate value early, and scale through operating budgets rather than major capex are also being prioritised.

In practice, only a handful of sectors are changing decisions in a meaningful way today, most notably food and beverage and, to an extent, pharma, because their feedstocks and inputs are already being affected. Across much of the economy, climate risk analysis is still not embedded deeply enough to shape which markets companies enter or exit.

That gap is likely to become more visible as more transition plans are published. It will be clear where organisations have translated climate risk into strategy, and where they have not.

CSN: Are these investments mainly about managing risk, or about capturing growth opportunities?

James Dennis: Modelling sits at the heart of both risk management and identifying growth opportunities. In reality today, those organisations that are using climate and scenario analysis do so more defensively than offensively. The immediate focus tends to be resilience and cost management, with modelling used to understand exposure to disruption, volatility and tightening requirements, and to identify practical mitigations.

In the industrials space in particular, the emphasis is still largely on risk, especially supply chain vulnerability, operational continuity and input availability. In financial services, it typically shows up through portfolio risk, stress testing and disclosure.

That said, the most sophisticated companies are using the same modelling to look for opportunity. They use it to anticipate where demand may shift, where customers will pay for lower carbon alternatives, and where the transition may create new revenue pools. Those examples are still in the minority, but they show how modelling can move from a compliance exercise to a tool that informs strategy and investment.

CSN: How are corporates deciding which technologies to back, especially in sectors such as energy, heavy industry and transport?

James Dennis: Identifying which technologies to back is undoubtedly complex and sophisticated work. Principally, they’ll ask if a specific technology aligns with their strategy and solves a problem in their operations. Corporates invest in climate tech that’s directly relevant to their decarbonisation pathway. They will also look hard at where innovation is most needed, particularly in hard-to-abate activities where there are fewer obvious levers and the abatement challenge is greatest.

Next they’ll look at commercial viability and consider the scalability of any given tech. Unlike some venture investors, corporates favour technologies closer to commercialisation. A key part of that is whether there is an established demand market, evidence of customer pull, and ideally an order book that gives confidence the solution can grow beyond pilots.

The other main consideration is whether the tech has sector-specific feasibility. In heavy industry, that’s carbon capture, hydrogen and electrification that integrates with existing infrastructure. In transport, it’s alternative fuels and battery technology. They also look for clear synergies with the core business, because it is unlikely for a corporate to invest far outside its established capabilities. And there’s increasing focus on high-integrity approaches, meaning technologies that deliver credible, measurable emissions reductions. Boards are more wary than ever of perceived greenwashing.

CSN: Do corporate investors assess climate tech start-ups differently from traditional venture capital funds?

James Dennis: The approach taken by corporates and private equity or venture capital investors can differ significantly. Corporates place more weight on strategic fit than pure financial return. They’d usually ask how they can deploy the tech in their day-to-day operations and if it strengthens their competitive position. They often have longer investment horizons and may be more risk-tolerant if technology solves a critical problem. But they’re more demanding around proven viability – they need solutions that work in real industrial settings, not just labs. Deal structures differ too. Corporates are more likely to pursue partnerships or joint ventures alongside equity stakes, whereas VCs focus on financial return.

The lines are blurring, however. Corporates are getting more sophisticated, and VCs are increasingly engaging with corporate partners.

CSN: What mistakes do boards make when linking climate risk to investment strategy?

James Dennis: The biggest mistakes we see boards making is treating climate risk management as compliance rather than strategy. Some boards commission climate risk assessments to satisfy regulators, then the analysis just sits in a report rather than informing decisions. Another common error is focusing only on risk mitigation, cutting emissions from existing operations, without considering where growth opportunities lie. Companies taking a defensive-only approach miss the chance to invest in markets that will drive future value.

A related issue is that many organisations are still decarbonising primarily to protect the targets they have set, and to maintain credibility against those commitments, rather than testing decisions through a clear value lens. The risk is that investment becomes about staying in position on headline goals, not about prioritising the actions that deliver the strongest operational or commercial return for the business.

There’s also a tendency to underestimate the pace of change. Boards assume the transition will be gradual, but policy, technology and market sentiment can move fast. And poor data remains a persistent issue. You can’t make sound decisions without robust data on your emissions and exposures.

CSN: Looking ahead, do you expect corporate capital to play a larger role in funding climate innovation, particularly if venture funding remains tight?

James Dennis: In a constrained venture funding environment, we’d expect to see corporate capital play a larger role. Many corporates are well positioned to fill part of the gap, particularly for later-stage ventures, because they need these technologies for their own transitions and some have the balance sheet capacity to invest.

That said, their appetite will be selective. In most cases, corporates will look for proven demand, a committed order book or clear visibility on near term revenues, and strong alignment with their core business. It is unlikely they will take on significant risk without a compelling business case, especially while many organisations are tightening their belts.

Corporate capital alone will not be sufficient. We also expect government support to be needed in many cases to reduce the capital burden and share risk, particularly while businesses are tightening their belts. Blended finance and other de-risking mechanisms will often be key to getting projects to bankability.

Climate innovation needs patient, risk-tolerant funding, and venture capital will continue to play a crucial role early on. But I do expect corporates to become increasingly active, not just as customers or acquirers, but as strategic investors where the fit is right. Those that find technologies that work for both their business and the future low carbon economy are set to do well. It’s about securing their own commercial futures, something that I’ll be speaking more about at Reset Connect North in Leeds next week.

As more organisations publish transition plans, the gap between stated ambition and embedded strategy will grow harder to conceal. For boards still treating climate risk as a reporting obligation rather than a strategic input, the window for quiet course correction may be closing.