This week at Davos saw me absolutely fascinated, moderating a high-level dinnertime Portland-BCG discussion including Amber Rudd and around twenty global CEOs on the biggest theme of the whole event. (It’s a telling point that the star of Davos 2020 is Greta Thunberg, not the US President.)
Climate change and sustainability – all agreed – have generated currents in global thinking that are shifting commercial, regulatory and financial foundations inexorably in new directions. These tectonic shifts mean huge, structural change, from grassroots to government – and, significantly, across all sectors.
It may be fossil fuels and mining feeling the pressure today, but tomorrow it’ll be – for example – luxury brands. (The four biggest luxury groups combined are today worth more than the four biggest automotive manufacturers.) No sector can afford to be ‘thinking about it’ rather than acting.
The challenge, in playing to be a winner, is negotiating trade-offs between ‘good-for-our-planet’ survival and ‘good-for-our-profit’ survival. Making the right decision demands courage and impeccable communications. Greenwashing or flabby messaging indicates sad irresponsibility at best. Companies must be rigorous and possibly spectacular in re-orienting around climate change. A great example of simplicity at scale: Marc Benioff of Salesforce proposes to plant a trillion trees.
Any would-be leader must likewise step up on sustainability, be knowledgeable and literate on the issues, well-versed in the science, and prepared for re-organisation of C-suite remuneration and incentivisation along climate-change lines too.
CEOs convinced by the science may yet doubt technology’s role – does tech not bring yet more problems along the lines of the Industrial Revolution, hydrocarbons, etc? Yet so much available tech can actually help dramatically. Again, it’s about communication. Influencers can do so much: Nico Rosberg (2016’s Formula One champion), a committed investor, now organises Berlin’s annual Greentech Festival. More effective communication of the good ideas would mean faster, broader take-up.
Speed is everything. In finance, law and regulation, a combination of ongoing changes are gaining momentum and impact even across borders. Just two examples: Blackrock’s proposal to cut holdings in fossil fuels and increase green holdings, and the European Green Deal’s ‘carbon border-tax’ by which the polluter, not the consumer, pays – putting the squeeze on big exporters with big pollution profiles. As governments, central banks and major funds explore and implement new policies for sustainability, investors and lenders as well as banks will follow suit, with significant risk and credit implications for corporations. Cross-border sustainability is also a salient point for discussion in any international deal or trade treaty, and one that the UK must look to in steering through Brexit agreements.
The hard numbers are really hard. In constraining the global temperature rise to 2 degrees centigrade, Refinitiv calculates that carbon tax at just $75/ton will cost the private sector some $4 trillion – around 4% of global GDP – hitting most-affected company revenues at an estimated 13%. If we aim for 1.5 degrees, the consequences are even more stringent. Some industries may have as little as two years to make the necessary changes to survive, some may have as much as ten, but urgency is the keynote.
In short, there is no question of ‘sustaining’ an existing concern. It’s white-knuckle survival during the transformation into a business of the future. If you’re not making substantial (not to say drastic) changes now, you’re going to see difficulties soon.
As I looked around the Davos diners making these points, I was struck by the observation that Extinction Rebellion aren’t the cultural outliers. To sit on one’s hands now is the radically immoral step. To make the change is no more than conservatively correct.
As ever, of course, good must not only be done but be seen to be done. As ever, the right communications strategy is key to corporate survival in times of change.
But sustainability bites deeper and harder than truisms. As comms and PR professionals, wielding what power we have to promote the good, we must work as hard as anyone in the decade ahead to do the right thing.