The views and opinions expressed in this article are those of the author.
The developed world has lost 50% of its sperm count. Cancer rates are higher than they have ever been. We are mourning glaciers and discovering plastic particulates inside fish from the very deepest parts of our oceans. These absurd concepts, once the remit of science fiction authors, are no longer so fantastical.
Climate change has trickled into our collective awareness and pressure has been building globally amongst citizens — often in different forms. Some claim we cannot go far enough in our personal choices, that the onus is on the individual to vote, both at the polling booth and with our wallets, to push through meaningful change. Others look to corporate entities and point a scathing finger.
My stance on the issue, which meekly agrees with both sides of the argument, was initially formed upon reading Jeremy Grantham’s “The Race For Our Lives Revisited”, a paper that offers a brutally honest business case for tackling climate change. Grantham’s position is supported by unflinchingly clear data and demonstrates that yes, individuals can have a net positive effect on the climate. From a pragmatic perspective, however, the problem is too great in scope to be addressed by the actions of individuals. Change must also come from the top. Should we look to our governments then, or our corporate leaders?
Floundering politicians and the galvanised masses
By many measures, our world leaders have failed. With concerning, and now validated, hypotheses having been proposed throughout the 1970s, they have had ample time to solve the global warming issue. But policy change is slow, while the effects of climate change are rapid. As a result of their inaction, we find ourselves in a desperate scramble to find a solution.
The ratification of the Paris Agreement was a powerful pledge. However, the conversation quickly progressed beyond “what shall we do?” to “are we doing enough?” At a time when local politics have superseded the global aim (I’m looking at you, Brexit), can those 184 state parties meet their lofty targets? In the UK, the Committee on Climate Change, the closest thing we have to a genuine government department on the matter, has warned we are no way near to reaching “Net Zero” by 2050. In response, our embattled Prime Minister has pledged to double climate funding at the UN General Assembly.
For many, this is not enough. Greta Thunberg, whose blistering efforts have set the world alight (pun not intended) and the mass public support she’s attracted is testament that consideration for the environment is no longer a fringe view but is mainstream and commands attention. And if politicians aren’t up to the task, the onus is on corporate leaders to take charge.
In this year’s Edelman Trust Barometer survey, trust in governments, institutions and “the system” has been dissolved. Yet, the data point towards an agreement that change will not come from elected officials, but CEOs and companies. 76% of individuals believe that CEOs should take the lead on pushing through change rather than waiting for governments to impose it, and most of these individuals believe that CEOs wield the power to create positive change. Faith in companies is even higher, with 73% of respondents agreeing that specific measures can be taken to increase profits, society, and the environment simultaneously.
Opportunities amongst the challenges
For firms looking to capitalise on these winds of change, building out an agenda that meets the demands of conscientious consumers should be an integral part of their strategy, one that propels them into our hopefully salvageable future. Those organisations that choose to ignore the climate-conscious, will likely find themselves at the mercy of the angry mob.
“I need to recognize where consumers want us in ten years… I believe businesses that are only targeting profits will die.”
~ Alex Ricard, CEO, Pernod Ricard
A pertinent example can be found in the Adani Carmichael Coal mine site, situated in the Galilee Basin of western Queensland. Here, an energised and outspoken slice of the Australian public not only waged war on Adani but have spurred a nationwide dialogue on the role of corporate entities, their social contributions, and their long-term benefit to society. After nine years of setbacks, it will be surprising if the mine ever becomes viable. The saga prompts an important question not just for competitors in the energy industry, but for any organisation: why bother pursuing an objective that society objects to?
Given that technology and strategies aiming to temper the effects of climate change on the human population will generate investment opportunities of $26tn between now and 2030, there are ample opportunities to pursue objectives under which both financial gain and social considerations align. On the other hand, continuing as we are will result in losses of anywhere from $4.2tn to $43tn between now and 2100. Forward-looking CEOs and Directors should be viewing shifting public sentiment not as a barrier to growth, but an opportunity for market exploration and innovation. So how best to seize it?
“Climate change is one of the most urgent challenges facing the world today. With a mere twelve years to save the planet, now is the time for corporate directors to step up, be courageous and ensure the long-term resilience of their organisations for the good of society through effective climate governance.”
~ Katherine Garrett-Cox; CEO, Gulf International Bank UK; Supervisory Board Member, Deutsche Bank
There are actions that corporate leaders can take to embed sustainable practices and signal to consumers and investors that an organisation is forward-focused and considering the wider impact of its work.
Firstly, and perhaps most importantly: casting a critical eye on the actual products and services offering and reviewing their net effect. At every stage of a product’s lifecycle, from supply, to manufacture, to consumption, organisations must explore alternatives that might increase the benefit to all stakeholders.
Approaching this self-analysis requires objectivity and empathy — qualities that are not often worshipped in the corridors of corporate powers. So, secondly: tying executive and board pay to measurable environmental targets; a move that is being embraced by Royal Dutch Shell and BHP. Humans are creatures of incentive (after all, economic incentive led us into this climate predicament) and harnessing this propensity for reward is a powerful tool in guiding our behaviour.
Thirdly: seeking out diverse and knowledgeable directors. PepsiCo’s recent appointment of a Chief Sustainability Officer reflects the growing trend within large corporations of empowering the environmental voice. Climate change is a complex issue, but recruiting and developing talented individuals who are passionate about a sustainable future is an action that organisations can pursue immediately.
Finally, and at the risk of sounding parochial: improving board reporting. When the flow of information to the top is inadequate, aligning an organisation to the needs of all stakeholders, including the environment, is impossible. Proof of action, through best-practice reporting, not only keeps a company on the right side of regulatory bodies (see Section 172 of the Companies Act), but also guides organisational priorities towards the critical intersection of sustainability and corporate success. Getting this right affirms to stakeholders that commitment to the future has been made. The companies that recognise this are best placed to thrive and shape the world of tomorrow.
Corporate leaders are uniquely placed to have an impact on where we, as a species, are headed. It won’t be easy: their legacy is built upon the problems they solve and the value they create, and pursuing climate change innovation will be costly in the short run. But if the decision-makers truly care about long-term value creation, then they must recognise the value in taking a short-term profit hit to secure a sustainable future.
Boards are uniquely placed to rally all stakeholders, from concerned consumers to wary investors, around this cause. If we do end up winning this race, it won’t be a result of vague calls to action at the signing of international accords, but from corporate entities aligning their aims with societal and environmental wellbeing. For that to happen, the individuals at the helm must also align themselves to these ends.
Alexander is Client Executive at Board Intelligence. He holds a Master’s degree in Bioarchaeology and Forensic Anthropology from UCL, can locate clandestine graves with drones, and has been a bartender across the world.