As temperatures rise around the globe, the appetite to do something about the devastating impact of those rising temperatures on our planet seems to be cooling.
With the fallout from the Covid-19 pandemic, the war in Ukraine and severe droughts across parts of the Global South, today’s urgent challenges often loom larger than the challenge of tackling climate change, which many perceive as a task for the future.
But we cannot wait until tomorrow to fix today’s problems, and no single individual, organisation or government can achieve success in isolation. The need for collective action to tackle the climate crisis galvanised Saïd Business School and seven other European business schools to join forces. In 2021, ahead of the crucial climate summit COP26, we created a unique partnership - Business Schools for Climate Leadership - to help present and future leaders to combat climate change. Our collective action did not stop after COP26. We are still collaborating to drive further change at the next climate summit, COP27 in Sharm el-Sheik in November.
It doesn’t have to be an ‘either / or’ approach. If we act together we can speed up the necessary change and transformation needed while avoiding the massive social and economic costs.
I recently joined my colleagues Knut Haanaes, Professor of Strategy and Lundin Sustainability Chair at IMD, and Kamiar Mohaddes, Associate Professor in Economics and Policy at Cambridge Judge Business School, on a joint webinar discussing the challenges businesses are facing, the perceived tension between profit and sustainability, and the leadership practices needed to put climate action at the core of a firm’s business strategy.
As a scholar of leadership and organisations, I have studied these issues not only in the context of sustainability and climate action, but also in the context of many other social issues that businesses are increasingly trying to address. It does not have to be an 'either / or' approach. If we act together, we can speed up the transformation that is needed while avoiding the massive social and economic costs.
This sentiment was echoed in the February 2022 report ‘Net Zero Business or Business for Net Zero’, which was jointly published by Oxford Net Zero, the Smith School of Enterprise and the Environment and the Skoll Centre for Social Entrepreneurship, of which I am Academic Director.
It is crucial to our future then, that we develop strategies to help companies and organisations meaningfully engage with the climate crisis. Let us first tackle the internal challenges that organisations face. Here, I have advocated a three-pronged approach:
The mindset piece
First, firms, and most especially their senior leaders, should adopt a 'both/and mindset' by considering how they can achieve business success through sustainability, and sustainability through business success. Although there will of course be some trade-offs, and these cannot be ignored, we need leaders to seek out and create opportunities for integrative solutions that both advance sustainability and help the business succeed.
The structural piece
Second, regulators and companies themselves need to create strong 'guardrails' to ensure that the goals, metrics and incentives around sustainability are as tough as those around financial performance. This is a complex but important piece of work, as many traditional appraisal tools do not capture sustainability data, such as the cost of carbon emissions that an organisation is not yet liable to pay. But as my colleague Anette Mikes has found in her research on European heavy industries, many companies are already factoring in a carbon charge in anticipation of tougher carbon-tax regimes in their investment horizon.
The innovation piece
Third, as we think about the transformation required in established firms, we need to cultivate and celebrate the ability to learn, experiment and even sometimes to fail when we are coming up with new solutions. We need to be prepared to start all over again or to revisit the plan or idea and try it again. Because the solutions we need are not all known yet. That approach to business is very hard to cultivate but very important.
Running alongside this internal track there is a complementary external track. This brings me back to that critical point about collaboration. Companies have to start collaborating with diverse stakeholders ranging from activists such as Extinction Rebellion to investors and fund managers, NGOs, and government agencies.
Last year in a landmark piece of research, The Decisive Decade: Organising Climate Action, my colleagues and I set about mapping the full ecosystem of global climate action organisations and analysing how these organisations can overcome fragmentation – across business, civil society and government, as well as between the Global North and Global South – to work together toward meaningful change. All organisations have a role to play: some are highlighting the climate problem, some are operationalising ways of addressing it, and some are orchestrating connections and resourcing change across sectors.
The more businesses and business leaders understand about this complex and multi-faceted climate eco-system and how it operates, the more they can leverage their role in that eco-system to reach net-zero targets and create a regenerative, restorative economy for all.
During the webinar, I highlighted three strategies for fostering what I call 'catalytic collaborations': partnerships in one area that catalyse further joint efforts across sectors and geographies, creating a virtuous cycle of climate action.
We need a shared narrative
We need a shared frame of reference for talking about the climate problem and the future we are trying to create: a narrative that brings people together and motivates individuals and organisations alike to take action themselves and to demand it from others. Technical terms such as 'climate-resilient development pathways' are helpful for some, but they will not excite mass audiences unfamiliar with scientific or policy aspects of the climate crisis.
We need to create trust
We need to create trust between businesses, climate activists, governments and local communities. Trust is especially important as each type of organisation brings a different perspective and different forms of power, influence and resources to the table. At present, there are too few opportunities to openly and productively discuss critical yet potentially divisive issues, such as those that reside at the intersection of climate change, development and human rights. We need to create physical or virtual spaces that bring together diverse organisations to tackle these thorny issues, and we need expert facilitation to help foster mutual understanding and build a willingness to work together. Cross-sector alliances and working groups offer a starting point, as do partnerships between businesses and NGOs, such as Unilever’s work with Oxfam in Vietnam.
We need to strengthen accountability
While a shared narrative and a foundation of trust are important, they will only get us so far without enforcement mechanisms. This brings us to the third critical strategy: accountability. Despite businesses’ numerous pledges and commitments to net-zero and other climate goals, mechanisms for enforcing commitments are not well-developed. To trigger the changes required for a just transition toward a thriving net-zero emissions economy, we need to significantly strengthen frameworks for holding businesses accountable for their environmental and social performance. This will require new, more rigorous measurement systems that integrate the perspectives of all stakeholders, including investors, regulators, communities, consumers and employees. (My colleague Amir Amel-Zadeh outlines such an approach in his article, Why accountancy can save business.). Governments will play a big role in strengthening accountability, but we need others to step up as well: firms, NGOs, individual citizens and also business schools – we all have a critical role to play in climate leadership.
To be sure, there are significant challenges ahead. We will need to evolve and reinvent our current ways of working and being, as individuals, as organisations and as communities. But together we have the capacity, and can develop the tools, to catalyse the kinds of collaborations needed to truly crack the climate crisis.
