Leaders Now Seeing Climate Change as Risk That Can Be Managed, Not Uncertainty That Can’t (New for Sustainable Brands)

Here’s my latest trend piece for Sustainable Brands.

February 14, 2014

Leaders Now Seeing Climate Change as Risk That Can Be Managed, Not Uncertainty That Can’t (New for Sustainable Brands)

Last month, a front-page New York Times story reported that global business leaders Coca-Cola, Nike, and others are factoring in climate change risks as threats to the bottom line. This news followed CDP’s December reveal that 29 major companies use a shadow carbon price in their finances for climate risk evaluation.

What do these stories have in common? Risk.

I’ve noticed a decisive pivot in business conversations about climate change impacts from uncertainty — as just cause for delay or inaction — to a core business competency: managing risk. For forward-looking companies, this pivot may signal a tipping point from academic discussion to business action that they can use to their advantage.

Simply put, this change moves the conversation from: “What if we’re wrong about potential climate change-fueled catastrophes?” to “What if we’re right? What do we stand to lose, and how can we manage those risks?”

As an example of how this conversation has shifted, look at how Talking Climate’s Adam Corner explored uncertainty versus risk as an academic finding in November 2012. Compare that to his forceful Jan. 31 Guardian piece calling for the framing of risk over uncertainty as a business imperative.

While this idea may be familiar to SB readers, it’s worth noting how fast and far the “risk rather than uncertainty” message is spreading to broader business audiences — and who is delivering the message.

Forward-thinking business leaders and influencers can leverage this momentum for action within their organizations, and with industry peers, supply chain partners, customers, government and civil society allies.

Here are 11 notable recent instances in which business conversations about climate-change impacts center on risk:

Sept. 9, 2013: Harvard Business School’s “Working Knowledge” site reports on shifting the debate about climate change from a political discussion to a practical conversation about risk and reward.

Oct. 3, 2013: Financiers Michael Bloomberg, Hank Paulson and Tom Steyer announce their year-long “Risky Business” initiative to measure U.S. economic risks from climate change impacts.

Oct. 24, 2013: Investors ask oil, coal and power companies for climate risk information.

Dec. 6, 2013: Climate scientist Tamsin Edwards reports her findings from a meeting called “Communicating Risk and Uncertainty around Climate Change.”

Jan 15: Ceres hosts the Climate Risk Investor Summit with 500 global financial leaders.

Jan. 23: Sustainability thought leader Bob Willard posts “Unleashing 3 Risk Arguments in the Climate Debate” article

Jan. 24: At the Davos World Economic Forum, World Bank president Jim Yong Kim calls for carbon pricing and climate risk disclosure by government, businesses and NGOs

Jan. 30: Citing fiduciary duty, 17 philanthropic groups pledge divestment from fossil fuels and investment in clean-energy technologies as a “prudent response to climate risks.”

Jan. 31: Bloomberg starts his new job as United Nations special envoy to help cities around the world prepare for climate-change risks.

Feb. 5: White House announces “climate hubs” to help farmers and rural communities respond to climate risk.

Feb. 7: A new Ceres report shows more companies reporting climate risk to CDP than to the SEC.

The scientific consensus on human-caused global climate change hasn’t changed that much in the past 10 years. In that time, there’s been very little climate action overall. But now that’s clearly changing.

It’s been said that, “When we change how we look at things, the things we look at change.” I’m encouraged that global leaders in business, finance, government and behavioral economics are shifting to talking about climate-change impacts as business risks that can be managed rather than uncertainty that can’t.

This is a powerful mindset we can use to help achieve broad, global sustainability gains at every level.

Green Links: The Week’s Thinking, Reading, Writing

Must-Read, Long:

Trusting Harvard: The Cost of Unprincipled Investing [$2.99 on Kindle], by Robert A.G. Monks & Marcy Murninghan http://amzn.to/1aw1iLP


Green Links:

At WEF14, Lord Stern says he wishes he’d been more fierce on climate action and recommends the @NewClimateEcon group. http://t.co/iuRsV9cEa2

NYT piece shows business catching up on climate change risks. http://t.co/OW4lUVUj2E

Phoenix is planning for 100F nights. And others cites are too, because it’s a lot less expensive to plan for resilience than pay for repair. “Federal taxpayers spent $6 on disaster cleanup for every $1 spent on community reliance” http://t.co/gGpprMRdcD

Trust Across America’s 2014 Top Thought Leaders. Some people I already look up to, and others I’m looking forward to learning from. http://t.co/XQ9br0H20d

Cogent explanation about why risk is “uncertainty that matters” and must be counted for sustainability decisions.

By me: 5 NJ Climate Change Resources That Are Completely Under the Radar and Shouldn’t Be. http://t.co/o06BwU8H2N

Word out of Davos is that businesses are realizing they can gang together for real climate action. http://t.co/dUVA6Pu6cR

Last week’s 4-hour U.S. Senate climate change hearing. http://t.co/H7MPDW2tA8 and http://t.co/Y8mASZq3X9

Sanity from Andrew Winston: If We Don’t Tackle #Climate Change, The Rest of Our Problems Are Moot. http://bit.ly/KWwEiQ

Masterful job by Elaine Cohen to explain GRI v. IIRC.v. SASB http://t.co/LJygdMj0GZ

Smart read from Thomas Kolster “Nobody cares about sustainability.” http://t.co/SMug8BKQmR

SUPER explanation of SRI investing: “Buy green. Sell stranded.” http://t.co/Ba1q28IsX6

Green Science: Facts Are Facts

“You are entitled to your own opinion, but you are not entitled to your own facts.”–U.S. Senator Daniel Patrick Moynihan

When it comes to Climate Change discussions, things can get awfully….heated.

Global leaders met in Davos, Switzerland for the World Economic Forum last week to talk about, I would argue, how to share the world’s resources.  Some of us are using more than our share, to the detriment of others.  That’s a hard truth.

You know what’s even harder? Getting those of us with more to change how we live, consume, and drive.

It’s an aggravating truth that some people refuse to be swayed by reason to reconsider their positions, even when their current choice doesn’t serve their own best interests. Part of the problem is that people tend to shut down–and do nothing–when bombarded by too many choices. (See: Decision making theory)

I would also argue that a misapplied concept of Face –maintaining or losing social dignity–plays a powerful role as well. To admit we are wrong and take action to make things right, requires a significant cognitive shift.

A Davos participant wrote about this conundrum, and some paths forward, in this Harvard Business Review blog post yesterday.

To this point, a new Treehugger.com article reports on erroneous science reporting and what happens when climate change skeptics cover their eyes to the hard, scientific, facts that the globe is getting hotter. Why is this a problem? Because keeping a mental door shut to scientific facts allows people to perpetuate and protect their social, economic and political positions.

I believe we can all be in agreement about basic facts. We know the world is getting hotter, based on the replicated, peer-reviewed scientific findings by the overwhelming majority of the world’s experts.

For those who are having trouble getting there, let’s build bridges by teaching, learning and practicing analytical skills.  At the end of the day, I believe that when we know better, we do better.

Then we can get down to the business of what we’re going to do about our hotter-than-ever world.

Via treehugger.com:

Every once in a while a spasm of easily debunked but headline grabbing climate change denial splashes across the mainstream media. The last couple of days was one of those times, with a simply factually incorrect piece in the Wall Street Journal and another one in the Daily Mail repeating the tired meme that there hasn’t actually been any recorded warming on the planet in over a decade. Never mind that NASA released data showing quite starkly the exact opposite earlier in the same week.

Read the Treehugger.com article.