“Climate change is the biggest threat facing humanity!” “Solving climate change is profitable!” “It’s up to business to act!” Wait, what?
Scientists raised the alarm about climate change some 30 years ago. Today’s warnings of the risks of a much warmer “business as usual” future have become more strident. National and international leaders repeatedly have agreed on the need to avoid “dangerous” climate change, but they have not agreed on measures to do so.
It’s been almost 15 years since the World Economic Forum (WEF) characterized climate change as “the most pressing future issue facing the business community,” and climate risks have been at or near the top of the WEF’s annual Global Risk rankings ever since.
Anticipating near-term regulation, more than 20 years ago the U.S. electric sector led the business community in voluntary efforts to mitigate climate change. Today, the business community faces ever-growing pressure from the public, regulators, investors, and other stakeholders to do more, even to the extent of “solving the climate change problem if policy-makers won’t.”
Business decisions, however, depend on the answers to two critical questions: 1) is it worth it to me? and 2) can I do it? Notwithstanding countless reports, studies, and calls-to-action from environmental advocates, global consulting firms, and stakeholders suggesting either the presence of enormous risk or enormous opportunity, the reality today is that only a modest fraction of business decision-makers answer “yes” if asked whether climate change is a material enough business risk or opportunity to justify their substantial involvement, and an even smaller fraction has figured out a “can I do it” strategy with which they are comfortable.
“It’s up to us to solve this critical societal problem,” and “climate change is just one of many issues on my sustainability plate” are not compatible story lines, no matter how commonly held. Business decision-makers must choose between these contradictory but common assumptions. Decision-makers grappling with this topic should ensure that they effectively frame their risk and opportunity picture, adequately scoping and quantifying their climate change risks and opportunities. If deciding to pursue mitigation and adaptation strategies, they should ensure they have the best available information.