A new business paradigm to address climate change
As climate events threaten both business conditions and society in general, stakeholders are beginning to demand that companies act as responsible stewards of the earth. Which orthodoxies do leaders need to rethink right now?
OF the many issues billed as the defining challenges of our times, climate change is among those having the strongest claim. The science is as settled as any in the modern canon: Credible climate scientists are near-unanimous in concluding that human activity is changing the earth’s climate in ways that threaten the natural environment and civilization itself.
Given the stakes, every actor has a responsibility to do what they can to check climate change and adapt to a changed planet, a fact more companies are embracing as they look to embed a broader sense of purpose in their activities. Companies’ stakeholders, from consumers and employees to lenders and communities, are increasingly demanding action. The regulatory environment is likely to grow only more stringent going forward. The climate-related risks to operations and supply chains and facilities and workers compound as we experience record heat and unprecedented flooding.
Most fundamentally, unchecked climate change can jeopardize enterprises’ stock of social and natural capital. Going forward, a company’s societal “license to operate” will likely be contingent, in part, on it being a responsible steward of the earth.
Being a good steward and averting a disaster of our own making requires us to rethink many of the orthodoxies we have long taken for granted. Encouragingly, the COVID-19 pandemic has illustrated, in dramatic fashion, that many of the constraints we thought were binding—about how and where and when work gets done, and to what ends—were far more malleable than we believed. And we increasingly see a business community ready to act quickly to mitigate, adapt to, and create new value amid climate change, with bold initiatives being announced seemingly weekly.
Takeaways from these examples aren’t necessarily obvious, though. What should your company do? It’s easy to argue that we need to devote all available resources and energies to mitigating the climate crisis—after all, “There is no wealth on a dead planet,” as one climate protestor observed.5 At the same time—and to be just as hyperbolic—what good is saving the planet if everyone dies in the process? Finding a realistic and effective response in the infinite yet bounded space between “everything” and “nothing” remains a challenge for the business community. We do not lack for resources, tools, or cleverness. What is missing is a set of new decision-making paradigms suited to such an unprecedented challenge.
And so, for those leaders prepared to act but struggling to determine how best to proceed, we suggest a new way of thinking about how business can address climate change.