A Brutal Truth – Can your business handle it?

Business Leaders might need to re-discover their ability to radically adapt and or innovate in the face of the 1.5o hotter world that’s now upon us. This amount of heat changes things for most businesses.

In Paris 2015, global leaders agreed to act to ensure that global mean surface temperatures would rise by less than 1.5oC above preindustrial levels. My summer reading convinced me that we are nearly there and will surpass the 1.5oC target in the next few years, not the next 30.  Why?  Proven science and simple maths say we’re already above a 1.2 increase and El Nino will and another 0.2 – 0.3 between now and 2027.  The consequences are profound and expensive.

Predictions have been far too conservative.

Heat records have been smashed on every continent, and far faster than was expected. The same applies to rises in sea temperature, rates of ice loss at the poles, changes in sea currents, and we may have triggered events that will accelerate things very much faster. Arctic warming is already 3-4x greater than the global average.  The ice melts, so less solar heat is reflected back and the arctic waters, being dark, absorb that heat, then the hotter waters melt more Ice (e.g. in Greenland). Heat is releasing vast quantities of methane (34x the warming potential of CO2) from rocks, permafrost, and from degraded wetlands. Global heating is driving increasingly intense fires, releasing more CO2…. and so on, and so on.

The impacts might be much more severe- and sooner- too. Check this out if you need more convincing.

Can you handle the truth?

I’m not an alarmist or activist and I don’t intend to adversely affect people’s mental health, yet, younger people especially are being affected because they understand and care deeply about this.  I’ve been inspired by the work of Jim Collins – Good to Great published in 2001.  A book that has stuck with me throughout my career.  His point #2 states that great leaders are not afraid to confront the “brutal truth” in-front of them. The brutal truth of surpassing 1.5oC warming in the next 3 years is one you can’t ignore.  Ignorance, denial, or delay is the antithesis of progress, yet in the famous words of Jack Nicholson (a few good men) “You can’t handle the truth,” or can you?

The Stockdale paradox, again used by Jim Collins is relevant.  Holding onto a firm belief that we will eventually endure, whilst dealing with the current reality of what’s Infront of us.  Don’t just hope for the best, like hoping you’ll be out by Christmas or that the temperature will drop post El Nino.  Work for it. Why? There are many good reasons. ‘Because it’s the right thing to do’ is a good start, and selfish reasons also work. ‘For the long-term success of your business’. Or ‘Because I love my children (and grandchildren).’ As the world’s scientists said in 2022, failing to deliver the required pace and scale of action right now means risking ‘missing a rapidly closing widow for a liveable future’.

You know this

Take action, now, in the two ways that many of you, business leaders already have hands-on experience:

1.     Radical adaptation:  Think about how you adapted to the COVID-19 pandemic.  Rapidly and radically adapting your business to a changed world.  Weathering that storm, stepping-up, finding great people, setting up networks of teams across the business and turning things upside down whilst continuing to deliver for your customers.  Sound risky and painful, huh? To which I’d reply, ‘Not as painful as what is otherwise certain to come’ (and, also, ‘Have you got kids?’)

2.     Radical Innovation: Back in the 2000s some of you faced up to deeply financed, hugely disruptive, pure-play DotComs.  The empire struck back, took the best of eBusiness and exploited it for themselves.  This was radical innovation by big business, corporate venture style, and the eBusiness innovation was built outside of business as usual until it became business as usual. Some simply acquired those start-up eBusinesses when they ran out of cash.

Radical adaptation and innovation.

The Rs below the line are built into most business plans.  Your “Plan A” (making sustainability how you do business) should cover things like emissions reductions, renewable energy, recycling etc.  If it doesn’t then you need to address this.  However, prof Jem Bendell calls this “walking up a landslide” and John Elkington issued a recall on the Triple Bottom Line realising most corporate sustainability plans are insufficient and might even make things worse.

Radical Adaptation

• Resilience: How do we keep what we really want? Have you built into your business the skill and capacity to be robust under conditions of enormous stress and change? Human capital and physical resilience? Note: Resilience is typically discovered after the event.
• Restore: What can we bring back?   Invest in restoring natural capital, valuing nature, and securing the eco-system services it provides.  Many supply chains ultimately start with nature, or damage nature through raw material extraction.  Note: we can’t fix the climate without fixing nature (and vice versa)
• Relinquish:  What do we let go of? You may need to move operations away from coastal areas, even re-establish facilities in new places or shut down vulnerable ones.  Note: your most valuable (fossil-fuel) assets may become worthless a lot sooner than expected, so how will you account for that?
• Reconcile: What/who must we make peace with? This is really tough as it’s about coming to terms with things like species lost, productive land destroyed, homes and cherished places lost, and forced, massive scale climate migration. It’s a time for leaders, including politicians, to level with people and set out the options, sacrifices and necessary regulations.  Note some things e.g. air travel are already a challenge to your social license to operate. 

Radical Innovation

• Remove: How can we remove what’s causing this? We must not damage ecosystems which remove and store CO2 (like forests and oceans) and we need to invest in nature’s ability to remove CO2 from the atmosphere. There’s a major overhaul of the voluntary carbon markets underway which aims to develop credible projects but the critics of offsetting are winning the court of opinion. Note: Microsoft (and others) are piling $BNs into technology innovation to remove CO2, others like Nestle are focused on nature-based solutions.
• Re-manufacture: How do we stop wasting things? A growing part of industrial strategy is focused on circular economy outcomes, remanufactured equipment, machinery, furniture, etc., and other relatively high value items. The digital revolution combines with the economics of scarcity to create an industrial sustainability revolution. Note: remanufactured, re-purposed, reconditioned, can be better than new, and lower emissions.
• Regeneration: How do we renew and re-grow? Go beyond your “Plan A” and change the business you do to make a positive impact (not just how you do it).  Accelerate the launch of radical, new products, systems and services.  These innovations will follow an “S-Curve” longer time-frame, higher cost, risk and failure rate and in a 1.5 by2025 scenario the curve is likely to be steeper, sooner.  Note: non-linear is growth occurring already e.g. in solar, wind, batteries and EVs.
• Re-finance: Who owns the future?  There’s no shortage of money for transition finance and financing a more radical innovation agenda, but that doesn’t mean it is easy to get.  Clear, robust policies are needed right now to remove some of the uncertainties, and this is increasingly likely as this scenario plays out. Political factors have softened the UK’s policy commitment on climate recently and yet politicians are going to have to confront the same brutal truth soon enough.  Note: a total transformation of finance is happening so tap into it and invest in more radical innovation capabilities.
• Re-invent: What scope for system change?  Entire business systems will need re-inventing including how we live, where we live, holiday, what we live in, what we eat, drive, wear and where it comes from, etc.  These systems have evolved and been fine-tuned over a century of fossil fuelled dependency and are not easy to re-invent.  In turn calls for a radical re-invention of business models, management and leadership so businesses can step up to new realities and even provide solutions to them. Note: financing system change is the key to “owning the future.”

Exponential change creates non-linear growth

There is an unprecedented opportunity to challenge this brutal reality and prove that business is the force for good that can deliver radical adaptation and innovation.  Radical re-thinking is required and here’s some practical suggestions on what to do, quickly:

1.     Get some of you best people to form a team, with your leadership, to build a detailed scenario of what your business faces in this 66% probable, post 1.5oC world occurring in the next 2-3 years.

2.     Assess how effective your current risk management plans are in the face of this e.g. your TCFD thinking – is it real enough? your contingencies and resiliency investments – do they stack up?

3.     Review your hi risk/hi potential innovations (strategic and product) in this scenario which ones win out? Re-think ideas for corporate venturing, should you build something new alongside BAU?

Don’t write this off as climate-doom until you’ve thought it through and decided how to confront it. You can handle this.  

Note:  sources/inspirations include:

UN World Meteorological Organisation report highlighting a 66% chance of a 1.5oC rise by 2027 Read this

Working with Steve Evans and Dr Greg Lavery on “The Next Manufacturing Revolution”

Being a Director at Scient Corporation, the world’s leading eBusiness Systems Innovator in the DotCom era

World Economic Forum’s recent summary of non-linear growth in sustainable innovations

John Elkington who I was lucky to work with briefly on the Advisory Board of 2Degrees and his HBR Article/recall of the Triple Bottom line (Because it wasn’t working)

Deep Adaptation: A map for navigating climate tragedy, one of the most widely read research publications by Jem Bendell (2020 update)

Hugh M. , curry conversations, Real Zero, and the greatest human I know!

Dr Dominic Tantram MCIEEM CEnv FICRS at Terrafiniti for his sharp insights on sustainable business

AimHi Earth and Sarah Humphrys for their insight and teaching on tipping points

Nicola Kirton, FRSA and Iwan Jenkins for the KAI inspired adaptor-Innovator line in the model.

#innovation #adaptation #sustainability