I try to follow the climate change debate closely, and there seems far too little well-considered exploration of how the business world can best respond to the current crisis. One reason may be that this looks like an impossible issue. There are massive vested interests, powerful companies who seemingly depend on business models which are at odds with the systemic changes that the climate crisis needs.
Having spent twenty years in the world of big business, I have glimmers of hope that corporates can understand and somehow respond to fundamental threats to their business model: this is what I want to explore in this blog.
To make this more vivid, let’s put ourselves in the posh designer shoes of Steve Strong, Chief Executive of Flabster plc, a UK-based conglomerate in the food business. We join him on a Wednesday afternoon, but he’s wishing it was Friday evening. He’s being pestered for a “positive response on climate change”, by a large institutional shareholder, by a Guardian journalist, and by his daughter, who’s heavily involved with Extinction Rebellion.
Let’s use the elastic rules of fiction to imagine that somehow Steve calls me in as a consultant for advice. Here are the main issues I’d explore with him.
1. It’s not just about carbon
Steve, I know that the simpler the issue, the easier you can respond. But most worthwhile experts will tell you that the rapidly mounting crisis is not just about carbon emissions. It’s about the related collapse of ecosystems, and global food failures related to both.
What you can do: accept publicly that this is a crisis, and set a three-month deadline to assess the risks holistically and propose a strategy. Do this with a mix of your own best people and outside consultants. This commitment puts Flabster on the line, but will play well with your critics. As part of this assessment, see if there are existing networks, codes and initiatives which can guide you, speed progress, and give you credibility: for example, check out www.sciencebasedtargets.org and www.wemeanbusinesscoalition.org .
Whilst I don’t know the details of your business, Steve, I can at least give you a few guesses on some of the main issues your team will need to consider:
- Minimising carbon emissions at every stage of your production process, including raw material supplies and transport, right through to your deliveries to customers. Where carbon emissions can’t be eliminated, setting up offsetting or sequestration, with the aim of making your business zero emissions within a few years.
- Understanding and rectifying both present and past environmental impacts from your products, e.g. palm oil supply, investing in projects which restore or replace ecosystems you have damaged.
- Either eliminating raw materials with a clear record of environmental damage, such as palm oil, or only using suppliers who can be verified as environmentally sustainable. Understanding how production of your raw materials may impact on the food supplies and livelihoods of the population of those countries. If your production does impact them, providing demonstrable support for their food security, e.g. by regenerative agriculture.
The lonely view from Steve’s office
2. It’s not just about developed countries
It’s evident that those who did least to create climate change are already suffering most, and that will continue. You will be held to account globally: you can’t ‘solve’ your problem in Europe by offshoring it to developing countries.
What you can do: As part of your three-month review, truly understand your current impacts globally: partly by dialogue with NGO’s you might see as hostile, such as Greenpeace or WWF. Ask your review team to understand the principles of regenerative agriculture. Talk to your major suppliers (e.g. for sugar, palm oil) about their potential responses to climate change, and how you could support them.
Realise that there can be business benefits in being the progressive pioneer in your sector. Unilever is a good example in several food sectors. Committing to a regenerative supplier code within, say, two years may well have a cost impact, but could gain you market share with consumers, and support from some investors, e.g. the growing ethical sector.
3. This will affect profits
It’s likely that the extra costs of a progressive strategy will kick in before the potential benefits.
What you can do: Be upfront about this with shareholders. Explain that it’s the least bad option given the scale of the crisis. And realise that this is what will give you credibility with the climate activists and keep them somewhat off your back.
4. There’s a lot of understandable scepticism towards business
Steve, you and I know that there’s been a lot of greenwashing, smokescreening, and even deliberate deceit from parts of the business world around these issues, for decades. As an example of the current hostility to big business, see this blog from Professor Jem Bendell, a leading advisor to Extinction Rebellion.
What you can do: Be honest about past shortcomings. Make tangible commitments, and invite activists to hold you to account for them. This needs bravery, but there are potential payoffs in market share and future credibility.
5. These changes will need support from your stakeholders
Most of your stakeholders will already realise that this is a time of massive turmoil and uncertainty: they are probably worried and confused, and you may find a variety of different preferences and responses when you consult them. For example, some may already be advocating radical change as the best business response, whilst others may cling to a view that you can just do what you already do, only harder.
What you can do: Firstly, find your own sincere passion for this radical change. If that’s hard, talk more to your daughter, watch the Attenborough documentary,go and visit deforestation sites. Second, seek support from your top team and all your staff: you’ll almost certainly find this is readily available. Third, explain your strategy fully and positively to ethical funds. Highlight to current shareholders that your strategy should enhance share value by widening demand for shares, and protecting longer term profitability.
6. You need to face the emotional impact for you and your staff
The climate crisis and its implications are so big that it’s understandable for anyone to feel alarmed and even overwhelmed by them. This is one reason, why, even now, so many businesses are not facing the issues. The wisest experts on this topic such as Jem Bendell, highlight the emotional impacts of the situation, and the need to come to terms with these somehow before we can respond coherently and constructively. This is pretty certainly true for all of your staff, and all of your families.
What you can do: As a leader, you can do great service to your people and your business by being honest about your own emotions in this situation, and enabling your managers and all your staff to do the same. No doubt your Company already has a variety of support systems in place for its people: you need to get members of your team to understand the specific issues and processes which are relevant here, and make them available throughout the organisation. Also recognise that your own need for support is a valid one.
7. Governments may be too weak to hold a level playing field
Over the years, Steve, I’ve read many books on how to ‘solve’ the climate crisis. A common idea is that when things get bad enough governments will step in and put the economy on a wartime footing. If all businesses have a fair regulatory context imposed on them it could help. But do you think that’s likely when most governments these days are weak or right-wing?
What you can do: Don’t wait for government, don’t depend on industry agreements. Be bold enough to take the initiative, with support and using existing frameworks and networks as discussed earlier.
8. It may get worse before it gets better
I realise that Flabster plc is only just starting to feel pressure about climate change: do you think this will escalate or go away? My view is that the huge rise in public awareness in recent months and the success of a grassroots movement in catalysing this, will soon move on to a desire for action.You may soon find some businesses targeted by protest groups, and product boycotts being declared. Often these will choose their issues based on limited knowledge, and the choice of target companies can be arbitrary.
What you can do: As part of the three-month review, look at your vulnerabilities, i.e. which issues might activists target you for? As you start to put a constructive strategy in place, on the lines above, invite the activist groups to talk to you. This alone is likely to reduce the risk that you’re targeted.
An offer to businesses
If any business leaders read this, I’m offering an exploratory conversation free of charge. I have a Harvard MBA, twenty successful years as a manager and director of large businesses, and ten as a consultant. I also have an excellent network of individuals and organisations equally experienced in the corporate world. I can offer a catalytic setting for strategy retreats at Hazel Hill Wood, the 70-acre, off-grid woodland centre near Salisbury: see www.hazelhill.org.uk
Feel free to contact me: email@example.com