If humanity is going to avoid the worst effects of the climate crisis in the immediate future, we are going to have to fundamentally shift focus to face the climate crisis head-on. This will mean that as business leaders, we understand, actively pursue and facilitate this change so that everyone is an active participant in the solution.
A moment to reflect on the challenges facing humanity:
Everyone knows that the world is warming. We are in a period that climate scientists call “the great acceleration,” this is where temperature, atmospheric CO2, Methane, the melting of sea ice and a host of other climate KPIs are all increasing at unprecedented rates.
What people may not appreciate is the impact this is having on global biodiversity. Since 1970, the world has seen a 69% decline in land-based biodiversity and an 83% decline in freshwater life. As nature-loss reduces economic performance, it will become harder for countries to service debt, which will strain government budgets, forcing tax increases, spending cuts, or increased inflation. Freshwater biodiversity is vital for life, supporting ecosystems, environments and our food chains.
People say, “Stop global warming to protect the planet,” the planet will be fine, it’s our food supply and, therefore our civilisation that’s at risk.
The latest Intergovernmental Panel on Climate Change’s report states “There is a rapidly closing window of opportunity to secure a liveable and sustainable future for all (very high confidence).”
Sector wide challenge for businesses & governments:
The challenges of delivering a low carbon world and economy touches every economic sector. In 2022, the global green technology and sustainability market amounted to roughly $13.7bn, by 2030, it is expected to peak at almost $62bn, increasing at a CAGR of 20.8%.
Delivering Net Zero and staving off climate change is a predominantly technical challenge, be that actual technology installations or the application of technical skills relating to carbon emission reduction or nature based solutions. As the sector rapidly grows, the pool of existing technical expertise is being stretched, challenging businesses to maintain quality.
Strikingly on the eve of the first “Global Stocktake” mandated under the Paris Climate accord, a team of volunteers from the University of Oxford UK have been reviewing progress. They failed to identify any “emission reduction targets” for 4 UN member states, 439 regions in the top 25 emitting countries, 766 major cities & 734 of the world’s largest publicly listed companies. Setting a carbon emission reduction target is the bare minimum. These results suggest that the current sector growth of 20% a year will not be enough to deliver the desired results!
A paradigm shift:
I could talk about this amazing project or another amazing project where sustainability excellence has been delivered fuelled by this growth in sector revenue. However the truth is that this is just scratching the surface of what we need to collectively achieve. Behaving the same as we have always done is no longer enough. We all need to work together to make a fundamental shift in the way we behave.
The simplest way is to make carbon a critical factor in every decision-making process. We are all used to making decisions based on the old time, quality & cost paradigm. We now need to include carbon in this, adding a fourth dimension to our decision making. It’s a simple change to make just, ask yourself, “and what’s the carbon impact of that!”. It’s a single change that everyone could make and can be applied in every situation, when choosing to take a flight vs the train, when choosing what product to buy or even which food to consume.
Having a relatively small group of technical experts push for a low carbon world will not deliver the global outcomes we need, we need everyone to nudge in the same direction. In businesses we need every role to be a carbon role, bringing carbon into the decision-making process of every job on the planet.
If what I have outlined above doesn’t resonate with you, I would offer you an alternative perspective that may change your mind. Every company’s profit margin & talent pool will be detrimentally impacted if we don’t make this shift.
Businesses must define and deliver on their own sustainability commitments. This will protect revenues & help retain talented employees as the percentage of Millennials and Gen Z in the workplace increases and these generations also start to drive overall consumer behaviour.
A recent Deloitte survey of 23k Gen Z and Millennial respondents across 44 countries found that, approximately 60% of respondents reported feeling anxious about the environment, more than 40% of respondents have, or plan to, change jobs due to climate concerns and 53% of respondents said that sustainability has been deprioritized by their companies in recent years due to external factors such as COVID.
Maintaining secure low-cost funding sources should also be a consideration. Over 60% of US funds are now linked in some way to ESG performance.
Finances of Adaptation Vs. Inaction
A range of supra-national institutions estimate global GDP to be impacted between +2.5% to -2% by 2050 after climate change mitigation actions. The cost of unmitigated climate change is estimated at a larger range of 3% to 30% of global GDP by 2100. The cost of global warming in the most conservative scenario is thus higher than the mitigation cost in the most pessimistic scenario. So, it makes financial sense to act!