I am only half jesting! We have seen the rise of the Innovation officer, The Chief Digital Officer and the Chief Data Officer. We have heads of sustainable investing, so why not a Climate Change Officer?
Many of you will have seen the recent article on the BBC site: Greta Thunberg: Climate change ‘as urgent’ as coronavirus Greta Thunberg says the world needs to treat climate change with similar urgency to Covid-19. (Disclaimer: The BBC is not responsible for the content of this email, and anything written in this email does not necessarily reflect the BBC’s views or opinions.)
No punches pulled here! But climate change is like a volcano; smoke, steam, the odd earthquake, then, bang! All hell breaks loose and you wonder why you didn’t pay more attention to the signs. I guess the generation that ends up having to sort out the problem blames the previous despite the fact that this was set in motion with the First Industrial Revolution (1760-1820).
But why a new C-suite officer, Chief Climate Officer (CCO – not to be confused with Chief Compliance Officer). Well, let’s face it, it is going to be 4. 4C, that is, or more. I don’t think many believe we are going to keep temperature change to 2 degrees or lower. At four degrees, the world is in for a turbulent ride. China, India and the US are by far the biggest carbon contributors (China at 28%, US at 14.5% and India at 7% – 40% between just 3 countries!) and while the UK has cut its carbon emissions by approx. one third in the period 2000 to 2018, India has increased its by 157%. It looks increasingly like the world will remain reliant on high carbon-emitting fossil fuels for some time to come despite reported efforts across the globe of countries ramping up their clean energy capacity (Coal emits over 70% more carbon dioxide than natural gas according to the US energy Information administration). So, we are not even heading towards flat let alone a reverse and we know that it takes a long time for carbon to be scrubbed from the atmosphere. This is currently sitting at 407 parts per million (as at 2018) and is estimated to be the highest level for the last 800,000 years (based on ice core samples). although, a new study by the University of Louisiana suggests that this high goes as far back as 23 million years.
Some part of the problem is that on the surface, the western world might not look to suffer too badly given how far north most are situated – we share a latitude with parts of Alaska. 4 degrees in the UK could make for some really warm summers and a boon for the holiday industry. But that is being a bit naïve as the real impact could vary from extensive flooding events to dry, hot periods that we Brits are not used to. It was recently suggested that by the end of the century, we could regularly be seeing temperatures in Southern Britain of 40C y That is before we get to other areas of the world. India is already seeing temperatures of 50C and is thought to be a climate change hotspot, I.e. an area that sees above-average rises in temperature. Can you imagine consistent temperatures in India like those seen in deserts? A problem that India is already seeing as a significant proportion of its land is under pressure of desertification.
I think the biggest problem will be the accelerated ice melt of the Greenland glaciers. Seven metres of sea-level rise is locked up there and only a small amount of that, say a metre is going to have a big impact. Scientists keep revising the impact that the melting here is having on sea level rises. That on top of a reduction in Arctic sea ice allowing that sea to absorb more sunlight (rather than reflecting the energy back into space) and the potential for all that Greenland freshwater to impact the North Atlantic thermohaline circulation and the Western world could see significant changes to its weather and in some areas, already is – See Arctic Circle sees ‘highest-ever’ recorded temperatures
Our history is one of only learning once disaster strikes. It appears that we are heading towards the same lesson on climate change. Maybe the only way we can try to get on top of this is to commercialise it. Let’s face it, governments can’t seem to fight their way out of the climate ‘wet paper bag’ if the climate conferences are anything to go by. Lots of missed opportunities, lobbyists trying to protect old-world interests and politicians only interested in getting selfies for social media! Maybe industry can do a better job of it, especially if we can make some money out of it! Enter the new C-suite officer!
But, why on earth (no pun intended) would we do this? Well, consider the recent FCA discussion paper on “Transforming culture in financial services – Driving purposeful cultures” in March 2020, which stated that
“There are ever more insistent calls for firms and their leaders to step forward on climate change, on diversity and inclusion, on ESG (environmental, social and governance issues), on the ethical use of data, on acting in the best interests of customers and not just to act so as to optimise profitability.”
Firms are increasingly being asked to do the ‘right thing’ and not just make money. Unfortunately, that is what shareholders want so bringing the two together seems eminently sensible. Plus the millennial and Gen Z generations will begin to demand it so if we want to sell any products to the people of the future then maybe this is a good idea.
There are any number of areas that a CCO could contribute be that on investments, fund structures or climate-friendly products, to pushing the firm to go Carbon Negative (like some of the BigTech companies are doing) across its estate. We build shiny new offices (not that we are going to need these any more – see my last article that whilst eco-friendly, don’t seem to be powered by solar panels, wind or heat exchanges to a point where they have little reliance on power grid energy.
A Climate Change Officer could start a chain reaction in companies. Companies could compete on their climate change products or credentials (monitored effectively by our regulators, of course). No company would want to be Carbon positive. Even being Carbon Neutral would become unacceptable and affect a companies ESG rating. Carbon Negative would be the goal and once it became acceptable amongst workers, well, who would want to work for a Carbon Positive company? It would become as unacceptable as, say, bigotry, slavery or people trafficking.
So maybe it is time for CEOs to step forward and help pick up the challenge of climate change before we end up with another global disaster.