Partner Article

COViD and climate change: our response to this crisis will dictate how we respond to the next one

Part 1 of 2 By Nisha Deo, Founding Partner and Head of Strategy at Emergence Partners

Let’s start with a positive. COVID-19 has shown us the fast and decisive change the global business community is capable of when we take a crisis seriously. Now for the negative: coronavirus is not the only crisis in town. Our newfound crisis management capabilities will be coming in handy over the next half century, because, without wanting to pile on the anxiety, there is still the small matter of climate change that has been shoved to the periphery.

Up to now, climate change has presented itself to us via mostly gradual evidence; the melting of icecaps, the rising of sea levels. “Climate change isn’t a cliff we fall off, but a slope we slide down,” wrote climate scientist Kate Marvel. Arguably, at least until this year’s wildfires across Australia, it has caused nothing as visceral or drastically world-changing as the effects of COViD-19.

Anyone familiar with the latest climate science will know that over the next quarter century, the results of climate change are about to become a lot less gradual. For businesses worldwide, the destabilising effects of the COViD-19 crisis could be a taste of things to come.

Has there been enough corporate leadership on climate change?

There has been no shortage of swift and courageous corporate leadership in response to the coronavirus outbreak. Emergence Founding Partner Joy Poole explored some notable examples in her piece on crisis management last week. But can the same be said of the climate crisis? Is the Economist’s mammoth compilation of rapid and radical economic policy change across the globe in response to coronavirus the kind of piece we should be reading about climate change?

Last September, nearly 200 CEOs proposed - via the lobbying group The Business Roundtable (BRT) - the idea that businesses no longer exist solely to maximise shareholder profit, but “to create value for all our stakeholders.” This may not seem radical, but it’s a far cry from economist Milton Friedman’s influential guiding principle that “the social responsibility of business is to increase its profits”.

Five years after the Paris agreement, we’ve seen a total shift in awareness and understanding of climate change and its impacts. But while many companies are changing their operations and reducing their impacts in line with this new understanding of social responsibility, we still lack ambition and drive on many fronts. Recently, 87 global companies committed to science-based targets within their global enterprises, and another 203 have committed to 100% renewables by 2050 at the latest, via global corporate leadership initiative RE100. Sky’s ‘Sky Zero’ campaign has set a carbon zero deadline of 2030, in line with the most ambitious governments.

But this upturn should not be overstated - ethics watchdogs are still having to push companies into action. Last month, the Investment Association announced that it would give UK companies three years to explain how they will adapt to climate change.

We must beware of ‘greenwashing’ under the glare of the spotlight - the practise of insubstantial, largely cosmetic solutions in order to portray a positive public image. Climate change is a problem that is bigger than recycling, buying green, and turning the lights off when you leave a room. These piecemeal solutions “will ultimately disempower you and burn you out”, as Mary Anne Hailsar wrote in Wired, and besides, why should the obligation fall to the feet of the individual?

Post-COViD: a chance for a fresh start?

Let us not forget the COViD response’s ironic crossover effect on the environment: there are several examples of how our sudden restraints on human behaviour have significantly lowered CO2 emissions. Many of us who live in large cities are, for the first time in years, able to see the stars again at night.

Arguably the world’s most effective and collaborative climate campaign to date has happened almost by accident. Is the universe trying to tell us something? If it is, it would surely be along these lines: imagine what you could achieve if you actually tried.

This is not just about businesses doing their part to help the environment; it’s also about preparing them for the next inevitable catastrophe, and ensuring they can remain useful to the world. Globalised companies could be susceptible to increasingly unpredictable climate events all over the world. The key will be to get crisis management protocol in order and become more adaptable as an organisation.

This may mean reassessing supply chains, and potentially even scaling back an organisation’s global reach. In the face of unexpected roadblocks, Just-in-time (JIT) manufacturing has been proven to be futile and shortsighted. This was the focus of a recent op-ed in the New York Times: “Hospitals began to run out of masks for the same reason that supermarkets ran out of toilet paper — because their ‘just-in-time’ supply chains, which call for holding as little inventory as possible to meet demand, are built to optimize efficiency, not resiliency.” Indeed, Arthur Wyns, climate change researcher for WHO, wrote that the virus outbreak has given us “a deeper understanding of the ties that bind us on a global scale” - some of which in fact make businesses, and by extension the societies they serve, more susceptible to crisis.

What can you do to make a difference? In part 2, we’ll delve deeper into the actionable steps your business can take to become more sustainable and more adaptable to crisis.

This was posted in Bdaily's Members' News section by Nisha Deo .