Climate change: The huge new business imperative
Our founder and director Nik Gowing was in Davos. He reveals insights on the massive change in corporate commitments. He asks: Is there now a powerful coalition of leaders committed to irreversible action on the climate emergency and sustainability?
Business dithered and prevaricated at Davos a year ago as the new reality dawned. For my blog post in January 2019 I called it the ‘oh shit’ moment for CEO’s and company chairmen.
Davos 2020 was overwhelmingly different. It was also remarkable.
The hundreds of top leaders gathered here not only accepted the scale of the climate emergency. Critically, they went much further. Businesses now accept their core lead role in reversing the apparent free fall towards a climate catastrophe that scientists again warned here is almost uncontrollable.
But how enduring will the about turn on the climate emergency turn out to be?
My assessment: Very enduring, but with many inevitable bumps and wobbles on the way ahead.
“A planetary tipping point” was the description from Professor Johan Rockstrom, the Swedish doyen of climate emergency scientists. There is an “urgent need for resuscitation” I heard one speaker tell business leaders. “It is scary. We have got to do CPR on the planet.”
Businesses now recognise they can’t escape. That is not just the pretty convincing public veneer. It is what insiders attending closed meetings have shared privately.
I spent much of my time in the Sustainable Development Goals (SDG) tent outside the security area. It was a compelling engine of activity and action. And it raised hopes.
Having played a significant role in creating the planet’s existential problem, large numbers of top leaders came to recognise the new and vital role of business and finance as the core driver for urgent solutions. Nothing is unthinkable or unpalatable. Instead it is inevitable.
This is especially after the distressing lack of global unity and political will from governments, as was exposed starkly at the failed Madrid COP25 summit in December.
Business realises at last that it can make money from the crisis. There is profit – often very significant – in new strategies centred on sustainability. Too many CEOs and board chairs said this very loudly.
So did most investors.
Globally there is effectively an unlimited trove of uncommitted cash to invest, fuelled by low or no interest rates. Fossil fuel investments are likely to have no returns, with assets left stranded at some point.
Many revealed that they have halted lending for business projects that generate carbon. For example, loans for coal-fired power stations made huge profits for them over many decades. Banks and investors who spoke publicly said they have now stopped this line of profitable lending.
The declared ambition of the European Investment Bank is its ambitious plan to be Europe’s climate bank. Vice President, Emma Navarro was one of many who added their voice. Business leaders “must integrate sustainability and biodiversity into investment decisions” she told them.
Public pressure is shaping the urgency of this business response. It now goes far beyond the passionate interventions of Prince Charles, Sir David Attenborough, Greta Thunberg and the equally determined school students, like those who supported vocally her repeated clarion warnings in Davos. President Trump’s demeaning put down on Tuesday was ignored as merely true to form.
Ever greater numbers of customers and voters of all ages don’t hold back on showing their anxiety and frustration. This is even if the dramatic solutions needed to slow and halt both global warming and carbon emissions might destroy their jobs. They want action.
Leading figures in businesses (and politics) recognise increasingly their vulnerability to customers (and voters) who will boycott unsustainable products (or non-committal, unsatisfactory political policies).
Sensing what fast became the new unquestioning public mood, I routinely challenged leaders: was Davos 2020 really a moment of irreversible commitment?
The answers were revealing. Often there was hesitation which seemed to reveal an uncomfortable uncertainty.
Paul Polman, the hyper energetic campaigner for top leaders to transform themselves (who until a year ago was CEO of the consumer giant Unilever), expressed “hope”. But he warned that Davos was “only a barometer”. There was not yet a mandate set in stone, by which leaders and organisations can be held to account. Andrew Steer, the President and CEO of the World Resources Institute, was one of many who told me something similar.
So, after Davos the pressure for rapid change and accountability will have to become ever-more unrelenting. Why? One senior figure in banking described to me a Davos dinner of more than a dozen CEO’s, many of them American. He described an obvious panic among several at the table. They asked openly how would they reconfigure both their leadership and companies with the speed and intensity now being expected? An air of denial, resentment, acute discomfort and even panic was described to me.
I heard a leader of one large European business association describe to dinner guests how the vast majority of its members are “scared” about the implications. How would they reconfigure their companies to embrace the new imperatives for sustainability and confronting the climate emergency?
It has to be assumed that millions of leaders who run businesses of all sizes around the world share the same fear. They don’t yet have the corporate satnav or self confidence to guide them. Neither do most of them have the status, voice or cash reserves to qualify to be heard at Davos.
So it has to be asked sceptically: was the earnest talk in Davos really only about what sceptics labelled “virtue signalling”? Or is fundamental challenge really under way that will reduce substantially the threat to our planet?
After its own uncertainties a year or two ago, the hosts, the World Economic Forum, believes the answer is emphatically ‘yes’. There is more than enough commitment to drive what it labels “Mission Possible”.
“I have never seen such momentum to come together,” said Professor Rockstrom after so many years of frustration as the scientific evidence worsened. “We have finally taken this issue out of the bubble. This is not the end, just the start,” said Peter Bakker, the admirably irrepressible president of the World Business Council for Sustainable Development. “The compass is set in a clear direction,” said Marco Lambertini, Director General of WWF International. He then added one caution: “There is a transition, but to where?”
Mr Gore warned that too many people still seem immune “to the ransacking of our planet …we are ransacking our home. It is unforgiveable. It must be stopped”. But with a tone of relief he then said that after so many years “it feels like a change; a turning point”. But he added: “I don’t want to give false hope …I am genuinely optimistic. We are in the early stages of a sustainable energy revolution.”
Many top business voices kept saying they can’t make the urgent transition alone. Governments have to be far more engaged and decisive. “Leaders and heads of state must not be shy of talking about biodiversity,” urged Brune Poirson, the French Secretary of State for Ecological and Inclusive Transition.
On balance, I left Davos early on Saturday morning uplifted and far more heartened than the ‘oh shit’ alert of a year ago.
Such was the warmth that I walked down to the station before dawn without hat or gloves. As I know from my years broadcasting here on a freezing gantry for BBC World News, in January the temperatures should be well below zero.
The evidence of warming I saw through the window of the narrow-gauge train were unnerving. There was so little snow. There were even some first green shoots of spring.
The business leaders will have taken that same journey, either by train or in their black limos. Will what they saw through the windows heading for Zurich airport have reinforced in them an imperative to act decisively?
We must not just hope. In the coming months we must all monitor and call to account those leaders, corporates and institutions who believe that they can get away with talking, not doing.
But many – probably a critical mass – now want to “do” and as fast as they can, given the unrelenting intensity of the unravelling sustainability crisis.
The next ten months in the run-up to the COP26 conference are critical. A huge amount of work and inspiration is needed to embolden and excite more leaders in global governments and business about the new climate realities, expectations and opportunities. Who will lead on helping them accept, then act on those challenges?
From what I heard both in the SDG Tent and outside it is clear that there is now a critical mass of people who do get the urgency to change course. The mountain of resistance is moving.
Our Thinking the Unthinkable (TTU) project is committed to working with them. Critically the focus must be on the huge number of waverers and uncommitted at the top who wonder how to change their leadership so it can grip successfully the enormity of need.
Get in touch with TTU if you would like to work with us, or you are a leader looking to be energised, or we can help you. Also monitor our website for updated postings for how leaders can be emboldened to handle the enormous challenges of sustainability and the Climate Emergency in the coming months.
We look forward to you joining the fast growing community.