Talking about... Ukraine and climate with Aron Cramer

Nik Gowing

Welcome to Talking About Thinking the Unthinkable - our latest leadership conversation and podcast.

I’m Nik Gowing, and I’m delighted to welcome from San Francisco, Aron Cramer, who’s president and chief executive of Business for Social Responsibility, BSR. BSR has more than 300 member companies now. Its mission is to help them build a just and sustainable world.

Well, when we agreed this date for you to join us, Aron, it was for you to help inspire business and wavering business leaders on this evermore vital track on the confronting of the climate emergency on sustainability and achieving Net Zero emissions. We expected the latest UN scientific report to make a dire assessment that we’re running out of time and breaching planetary boundaries. It was published on the last day of February. We were right. It laid out terrifying, unthinkables.

UN Secretary General Antonio Guterres described it as a damning indictment of failed climate leadership, with people on the planet being clobbered, as he put it. Clobbered by climate change. Half of humanity laying in the danger zone, and many ecosystems at the point of no return.

But now, as we record this, we’re all consumed by the Russian invasion of Ukraine, and the terrifying sinister, ghastly nature of all that is unfolding with the prospect of another unthinkable World War Three. And I’m not exaggerating.

So Aron, in these 20 minutes, we need to converge these two critical and existential issues for us on this planet and the ability of leaders to handle them. We seem to have got through Covid-19, even with 6 million deaths. How do you think leadership is confronting these sinister new realities?

Aron Cramer

Well, Nik, great to be with you. And as you say, the world is being faced with a remarkable set of challenges. And this is massive for leaders in any institution, business, but all institutions and I think you use the right word.

I think many of these challenges are indeed existential. War and peace is an existential question. Climate is an existential question. We also have concerns about the social contract and the social safety net in the light of COVID. And also ongoing concerns about racial justice and equity, gender equity, etc. Many of these topics are interrelated.

There is certainly a climate dimension, that’s very important when it comes to Ukraine. There’s also a gender lens that you can place on climate. So we are facing a multitude of crises. They are interlinked in many ways. They are existential. And they come at a time when all institutions are facing a lot of fragmentation geopolitically, of course, but also in terms of information ecosystems, and also in terms of generational change, and also in terms of the lack of trust in large institutions.

So the the agenda is quite long for leaders in business. And these are all things that are directly relevant to the business environment, even if they come from things that have not been traditionally seen as part of the business environment.

Nik Gowing

How are leaders adapting, given the enormity of what we’re agreeing are existential issues? It isn’t about business as usual. This may sound a crude, simplistic question, but how are leaders adapting? Are they sticking with it? Are they showing incredible initiative to get over, at high speed, the kind of problems we’re talking about?

Aron Cramer

I think it’s fair to say that many business leaders are adapting but they are reactive. And that’s partly because of the sheer pace of change. And I don’t want to overlook that the pace of change is another dimension to the world in which we’re living. And it means that businesses have to deal with so many issues, that simple bandwidth becomes a challenge.

This is what we’ve seen when it comes to talking with C suite officials, with boards. That the simple fact of the number of profound challenges, that in itself is something that is is crucially important. And let’s remember, business disruption was already happening at a pace not seen in quite some time, probably since the Industrial Revolution. Driven by technology, but not only by technology. So business models were already having to evolve very, very rapidly.

So I think business leaders are adapting, but they’re being called upon to do some new things, address issues that they have not traditionally been called upon to make and withdraw, as in the case of Russia and Ukraine. Pull back from markets in a way that we have not seen since the thawing of the Cold War. And, you know, the arrival of China in the global economy in the 1980s. So it is indeed a new world. And I think it’s fair to say that business leaders are adapting, but are having to play catch up, quite frankly.

Nik Gowing

There is one fascinating thing that’s happened certainly in the first two weeks of the dreadful Ukrainian crisis. The pressure that’s built on companies, from shareholders, from stakeholders, from customers, from so many, to get out of Russia. Now, I’m raising that, because one of the challenges which you’ve been facing at BSR and is being phased right around the world, is getting people to mobilise on Net Zero, getting pressure from the grassroots, if you like, from those with interest in the company, or whatever we’re talking about to change.

Now, do you see something emerging there: the speed at which companies have reacted, and literally pulled out of the market?

Aron Cramer

Withdrawing from a market is simpler, as hard as it is, it is simpler than changing the energy system on which we have relied for 100 years, 125 years. So I don’t think we see the same speed of action on climate, even though there is a lot of action on climate, it has a much bigger impact on business, on the economy and the well being of all of us as citizens. And so we need to accelerate progress on that. And I fear that we will allow ourselves to be diverted.

Let me put it very bluntly, if the invasion of Ukraine distracts us, prevents us, from taking decisive action on climate, that is another way that Vladimir Putin wins.

That is not a solution that any of us wants. So it is absolutely essential that we stay resolute on climate amidst all of this. But that requires some very difficult decisions, not only on the part of business, but also, of course, on the part of governments, and it will require adaptation on the part of all of us who rely on the energy system that we have, and it’s being disrupted.

Nik Gowing

Are you saying actually Aron that we’re talking about here the frailty of leadership, which is it takes an absolute dreadful moment, a moment of crisis, like what has happened in Ukraine in the first two weeks, which is unthinkable for most people to mobilise. It requires that ‘don’t look up’ moment - the Meteor is approaching the earth. And therefore, too many leaders are, if you like, coming to terms with the climate emergency and thinking somehow it can be done in a more relaxed way?

Aron Cramer

Well, I fear that the number of crises we collectively are facing will just cause us to spend less time and attention on climate. But let me make another point, it is easier to stop doing something than to build something new.

It’s a lot easier to pull out of Russia, even though for some companies like BP, it is a $25 billion decision. But that’s a lot easier than building a new energy system. So the challenge of rising to the need to address climate change requires us to build something new, not withdraw from a single country, no matter how significant that is. And we have to stay focused on it.

If we do not stay focused on it, we will continue to face, as you say, these ‘don’t look up’ moments. Where we find that all of a sudden, our cities are uninhabitable, the cost of doing business rises, vulnerable populations, and indeed, vulnerable nations are erased from the map. We can’t let that happen. And we can’t be diverted by today’s crisis.

Nik Gowing

Are you saying there’s a degree of inertia among members? You say that you’re being overloaded now with large numbers of members who want to join you, which is great news. And I certainly know from the last few years, you’ve moved up to more than 300. I remember when you were under 100. So that that shows a commitment. But are you saying that actually there’s still a kind of inertia or denial out there thinking ‘it ain’t going to be important for us’?

Aron Cramer

I don’t think there’s inertia. Let me give you an analogy. Let’s say you go to the gym, you get on the treadmill, and you set it to run at 10 kilometres an hour. And you feel pretty good about that pace. And you say okay, I’m going to turn it up to 15. Well, the number of things that we’re dealing with right now has turned that speed up to 20, 25, 30.

So companies are doing more, governments are doing more, citizens are doing more. But the needs are growing faster than we are able to increase our pace. This is true on climate. It’s true on a whole wide range of issues. So it’s not at all inertia. It’s the question of whether we can achieve the speed, the pace and the systematic delivery of solutions to stay ahead of the climate crisis, which is growing by the day.

Nik Gowing

What I’m trying to do is explore the kind of challenges you’re facing with your businesses, your governments, civil society, with citizens. The kind of thing which you say very clearly on your homepage on your website.

I mean, because let me read to you what Inger Andersen, Executive Director of the United Nations Environment Programme, said at the launch of working group two for the UNFCCC, the document, that big document, the dire document: “Climate change is not lurking and looking around corners, ready to pounce, it’s already upon us, raining blows on billions of people. We’re in an emergency heading for disaster. We can’t keep taking these hits and treating the wounds. Soon these wounds will be too deep, to catastrophic to heal.”

I find it difficult to think that anyone is in denial about that.

Aron Cramer

I don’t think we’re living in a world where there’s a lot of denial. I think we’re living in a world where the pace of change that is needed is so profound, that organisations are struggling to make that happen.

We now have 500 companies or more that have made commitments to achieve Net Zero by the middle of the century, or in many cases, well, well, before that. That’s great. But do we see that we are on the trajectory that we need to accomplish that? We’re not.

Part of the issue is that it does require a whole range of things. It requires a policy and market frameworks. It requires technological innovation. It requires some harder conversations about how much growth the world’s economy can actually sustain. It requires adaptation, which requires investments. And these are things that pay off over time.

The reports from the IPCC and elsewhere are very clear that over time, climate action is a far better economic choice than climate inaction. But it requires front loaded investments, it requires front loaded change, and our institutions are not good at doing those kinds of things.

Nik Gowing

What kind of obstructions are you facing? Because you talk about the need to see a changing world far more clearly. Which suggests that it’s murky, that it’s only partly visible, that there’s a kind of sense of narrow mindedness, of blinders, of blinkers. Is that what you’re trying to do, to really shed those blinders and blinkers?

Aron Cramer

Let me give you two examples of where we’re seeing that. One is directly part of climate and one is a broader point. So on climate, many, many companies now are doing reports under the task force for climate related financial disclosures, the TCFD. Those require climate scenarios. Many of the scenarios do not embrace the clear-eyed vision that you heard stated by Inger Andersen. So as we do those scenarios, and we do with a lot of companies, we push very hard for companies not only to do those scenarios, but to look at the world with clear eyes and to understand the profound consequences of inaction or delayed action. So this is where the world is moving, but not fast enough. Not far enough.

Let me make the second point, though, and this is particularly true in the United States, but not only in the United States. There is a through line of denial of objective fact. In the US, we see it with vaccine denial, we see it with denial of the results of the 2020 election. And we see it with climate denial, where people want to wish away uncomfortable, to use your phrase, unthinkable realities. They are realities, and we cannot afford to fool ourselves.

That is an absolutely juvenile response to all of the profound questions that the world is facing. And so I think we’ve seen with Russia and Ukraine, the consequences of our kidding ourselves about some very considerable realities that we face, we cannot afford that. We have to face the world clearly, or else the consequences of not doing so are too hard to contemplate.

Nik Gowing

But is there a lot of kidding going on - to use your word there - is a lot of kidding going on? About Net Zero and what really has to be achieved? Because, as you’ve heard John Kerry, the US presidential and special envoy on climate change say, we’ve done 65% of the work. Now we’ve got the really hard stuff - the last 35%. And it can’t be done by 2050. It’s got to be done in the next five or six years. I mean, that’s a gigantic challenge.

Is there a degree of switching off? Do people realise what Net Zero really means? It also means compensation for all the non-sustainable emissions, which have got us to where we are, quite apart from what we’re emitting at the moment.

Aron Cramer

Some recognise that, some don’t. That’s the reality. And I think one of the challenges is, if you look at all the surveys that are done of board members, non executive directors, they now all recognise the importance of dealing with climate. And they acknowledge in the surveys that they do not have the understanding of what to do. And further, the market rules do not yet - this is beginning to change - do not yet reward companies that take decisive action for long term value creation.

That is in the process of changing, it absolutely needs to change. There’s no silver bullet in any of this. But that’s what’s needed. So many do, many don’t. If you look at the UK, if you look to the United States, and you ask ‘do people recognise the gravity of the question’? The answer is, some do, some don’t. And the same thing is true for businesses and for business leaders.

The debates are much more real than they used to be, but they’re not yet as real as they need to be.

Nik Gowing

So I have got to ask you, I mean, do you think things really still are moving forward? And I say that because certainly, John Kerry said at the Munich Security Conference in the middle of February, just before the Ukraine invasion, he said, ‘we’re accelerating but we’re accelerating going backwards’.

You and I were both in Glasgow. It’s exactly a year - we’re recording this in early March - since Dasgupta produced his report on nature. Do you think even the fundamentals of the nature issue have been fully taken on board by corporates? In other words, understanding that externalities can’t be taken for granted anymore? They have a cost, a financial costs, the carbon cost, and that now has to be factored in. A year ago, we wouldn’t have been talking about it.

Aron Cramer

So let me answer your question in three dimensions. On climate, we are moving forward, but not fast enough. On nature, I don’t think we are moving forward significantly. In fact, you know, species loss continues to accelerate. The facts are what they are.

Let me also speak to the social and economic dimensions of addressing climate where I don’t think we’ve begun to fight that fight. And it is increasingly untenable for us to say that we are acting decisively on climate if we don’t also take into account the impacts on women on marginalised communities, on low lying states, those that have the most to lose from unchecked climate change.

So I would give the world different grades in each of those three categories. The best grade I would hand out is on climate where I do see progress, but it’s not yet enough to be sure.

Nik Gowing

One of the things which keeps coming through both from polling and also anecdotal discussions, particularly in backrooms offline, is that there are those in business who say we’re talking about it, we’re talking about it, we’re doing something about it. But actually, when you look at the numbers and the audit, and the number and the kind of measures for what they’re doing, things are not moving anything like as fast as they claim.

I’m not going to use the word greenwashing. But you know exactly what I mean. In other words, there’s still a lot of talk. Even with the Glasgow spirit. There’s a lot of talk, but it’s not really embedded in the DNA of the company or institution. Are you making progress there?

Aron Cramer

I don’t want to paint with too broad a brush. I think you can, again, put companies into three categories.

There are some that are making ambitious commitments, and that are moving in concert with those commitments. That is a small minority of the business community. There are other companies that are making ambitious commitments with a good faith effort to realise them, but not quite getting there yet. I think that constitutes a large number. And then there is absolutely a category of companies that you can say are engaged in greenwashing.

Greenwashing, though is different than setting targets, making a good faith effort to get there and not yet being there. One involves deception. One involves making best effort in doing something that’s really, really hard.

The reports that have come out just here in 2022, pointing out the divergence between commitments and achievement are essential. Accountability matters. It matters a great deal, and we need those mechanisms to be put in place. They can help to provide an accelerant to make sure that yes, we do continue to have ambitious commitments. But commitments without performance are words on a page and they don’t solve a thing.

Nik Gowing

Do you actually test with your members, and those who’ve chosen to join you, do you ask them the question ‘do you know how much carbon you’re producing’? ‘Do you know what happens with your transport fleet, your heating, your building’ and so on? Do they really know what they’re doing? Or are they wishing a certain number, hoping it’s relatively low, when actually the reality is much higher?

Aron Cramer

We have those conversations all the time. And I think the short answer is on scopes one and three, the things that companies control and have greater visibility into, they do have increasingly a pretty good picture of what that looks like.

But for many companies, if not the majority of companies, the majority of emissions are found in scope three. In value chains, in indirect emissions. And very few companies do have a precise understanding of what those numbers really are. And if you don’t have a precise understanding the question of whether you can actually achieve the emissions reductions that are needed sort of answers itself? And the answer is not the one we’re looking for.

So I think on scope three, we all have to do a much better job to understand what that picture looks like. Otherwise we’re, as Secretary Kerry said, we’re harvesting the low hanging fruit but not really getting at the core of the problem.

Nik Gowing

Final thought Aron - we’ve got about 90 seconds to run - what’s your overarching message?

Let’s end this, at least, with a degree of optimism or positivity. In other words, things can be done and in fact, the IPCC report said it’s doom, but actually, the war is not yet lost, we can still do stuff. Therefore, your members need to do much more, particularly if they’re on board. What would you say in a minute, literally, to them about how it’s achievable, and what they’ve got to be done, and why there’s economic value to doing it.

Aron Cramer

The future is being built today. Let’s remember that. That is absolutely central.

No business can thrive in a world beset by crises, whether it’s climate or something else. Therefore, businesses need to take action - all they can do within the walls of their company. They need to enable collaboration by working with industry partners and in communities, and they need to use their influence more positively.

We can only get so far with voluntary action. We absolutely need public policy frameworks in business needs to be at the table and all three of those ways: acting, enabling, influencing. Because there is no guarantee that any of us will be able to continue to live our lives the way we want. And there is no guarantee that any company will be here, or will be able to survive in the coming decades without decisive action.

So let me end by saying, using the word that you used at the start, these are existential questions. Let’s get after it.

Nik Gowing

Aron, thank you very much. Let’s put that as a degree of encouragement, which makes people go even faster - leaders to go even faster. Many thanks, indeed Aron Cramer, President and Chief Executive of BSR, Business for Social Responsibility.