This post is the second in a series of three articles which lay out why global warming will ultimately be resolved by the efforts of the business community. As I write this there's a lively comment thread on LinkedIn where Part 1 has been cross-posted. You can connect to that first post and the comment thread HERE. Part 1 talked largely about how a good manager looks at risk, why climate change needs to be considered a risk management issue, and how (because this risk is a systemic) it can't be resolved through obvious risk management tools. Today we're moving on to an evaluation of some bullet points that are germane and looking at how government, business and individuals rank on those qualities relative to one another. While doing that we'll frame out why the business community is better suited (and more likely) to solve the climate crisis than either of the other two. The final post in this series will talk about the levers that need to be pulled to make climate action effective and why the business community will be operating those levers.
This comparison is not about what I'd like to see happen or what I think should happen. It's about what realistic people can expect and the conclusions reasonable people can consider likely. This series makes the case that when presented with the means, motive, and opportunity:
- the business community will make the largest effort to resolve the climate crisis
- that it's in business's interest to do so and
- that this community has the swiftest and most effective set of tools to create meaningful action.
Below is a chart which includes a list of attributes you'd expect to see in any agency capable of making a massive impact on global warming. There are other items to be sure but for this comparison I wanted to limit the list to items that reflect on means, motive and opportunity. I also wanted the list limited to areas where the three would differ. Take a look and I'll give an explanation at the bottom.
For our purposes here I'm looking at these three in their aggregates. Government generally, the business community as an entity and citizens as a body.
Responds Well to Data
Perhaps a better label would be, 'Gathers, uses, and responds to the right data well'. If anything at all is known about people it's that they behave irrationally. Government(s) also tend to be irrational but in different ways. Business is far from perfect but it does operate with a better respect for facts than the first two. Even in opposition, the business community tends to look at data with an intellectual honesty hard to come by in government and altogether lacking in the public. It's true that in many cases individual businesses or trade groups have worked against a rising tide of facts but even in those cases an internal clarity exists within the groups about the existence of those facts. (tobacco being the best example of this)
Nimble / Can Act Quickly
A clock is running. Climate induced damages are already plague industries from farming to insurance. It's true that government could work quickly but does anyone actually see that happening? At the state level, yes. Federally, no. For this reason Government loses points here.
Wields Massive Funds
Even the Bill Gates, Carlos Slim crowd can't hope to make a dent on their own. Government on the other hand is well positioned with legislation and taxation as tools. Realistically though, I've never heard anyone suggest making hydrocarbons illegal so that leaves pigovian penalties and financial inducements; two tools which are blunt but effective. The business community has a breathtakingly large array of financial tools with which to work. It controls capital flows in the markets, aligns financial pools behind ROI and builds instruments that spread risk more effectively than disaster relief does. Here again we have a case of Government able but unwilling to act and business (like Ceres with it's over $20T) leading.
Can Scale Quickly
The same logic applies here that applied on the previous point. I'll admit also that individuals can scale quickly and this may well happen. You need look no further than the fight for LGBT equality to see the public in action but let's be honest about how often this happens and how effective it is.
Has a Stake In / Is a Constituent of Foreign Economies
This is my favorite point. Very often there's a fall back to the position that without China and India getting into the sustainability game there's no point. Not so. Governments can't force China or India to act but Walmart certainly can. They and other companies are already pushing carbon reduction strategies upstream to their suppliers. It's a unilateral decision made entirely for the sake of the climate crisis and it has impacts that resound into manufacturing centers across the world. As businesses de-leverage their carbon liability our global economy is forced into alignment with boardrooms far more quickly than it is with courtrooms.
Another way to write this is, "Knows how to persuade." This is important because persuasion is going to be critical and it needs to take place on several fronts. I've given Government a pass here. That's because governments have a big microphone and can get their messages out. Individuals however, do a poor job changing the minds of other people. A neighbor, sure. A stranger... not often.
No question here that government is dragging it's feet on this issue. The very nature of global warming is that it makes things unstable and requires change. With that change comes fights about money and power and those fights are hard enough when nothing of substance hangs in the balance. For that reason governments fail in this criteria. Overwhelmingly surveys tell us that people want this issue to be handled by government. A complete lack of response from legislators an parliaments world-wide explains my rating here. I rate business positively because there's evidence of a growing substantial groundswell. 40% of all public company proxy questions relate to environmental and sustainability issues. The adoption of renewable power provides an entry point into the issue and a cost savings for any who install it. More jobs exist in the wind, solar and battery space than exist in the coal & oil space and the margin is growing.
Means, motive and opportunity.
I hope this post has make sense to you. Remember that what I'm looking at here isn't about who's best for the job or who's responsible for the job. It's about who's correctly positioned and likely to do the job. In the final post we'll be looking at the tools of action and how they play to the self interest of business in unique ways.