· 6 min read
"The energy of motives is inversely proportional to their degree of purity" wrote the philosopher Simone Weil. This aphorism is deep -and cynical- as it brings to light many of the impure motives that move the world, in particular greed and fear.
Let’s have a close look at how greed and fear might be at play to fight climate change
We all know by now that climate change is a reality, and that we are headed for dire consequences if we continue emitting greenhouse gases (GHG) as we have done in the recent past. Many political and economic leaders have embraced the “net-zero” emissions target by 2050. But despite all good words, our global emissions continue to rise. Are we headed for a +4 to +5 °C world in 2100, with catastrophic consequences? Will climate be another example of the “tragedy of the commons” highlighted by Garrett Hardin back in 1968?
I don’t believe so. We will curb climate change. We will do it too late and so likely we are headed for a +2 °C trajectory. But we will reach net-zero. Through an indirect mechanism that is worth understanding.
We face a huge climate problem; political or civic actions have not been able to curb it
The long-term implications of climate change on ecosystems and mankind have become unquestionable. While the severe impacts are many decades away, younger generations have a deep sense of what will be a stake for them and for their children. They are the one leading the charge, and starting to convince even the older ones that this is everyone’s problem. In that respect, Greta Thunberg is one of the catalyst of this broad sense of urgency.
So far so good, but how does this collective conscience move into the economic sphere, the one that is generating the emissions? For a long time, many people thought that there would be two transmission belts: first customers becoming eco-conscious and changing their consumption patterns; second, politicians incorporating into the law the incentives to move away from fossil fuels. Marginal progresses have been made on those two fronts, but the net result is that emissions are still growing, after decades believing that customer and politicians would solve the problem. We went the route of purity of motives, and we must recognize that it is not very effective.
Should we conclude that we are doomed?
No, because there are a couple of mechanisms that started a few years ago, much less pure, but way more effective. They have to do with greed and fear, and are activated by the shadow of the future.
Imagine you are the CEO of a large company. Today, the direct and indirect emissions of your business are free. Putting CO2 and methane into the atmosphere has been a normal practice for so long that, until recently, no one ever thought that it would not continue forever. And so all your business plans have been built with the implied assumption that emissions will be free; and the profitability down the road is built on this assumption.
Something changed in the last couple of years
Your bankers and investors are starting to get worried. They hear all these terrifying news about climate change, and are starting to think how they will get their money back 10 or 20 years from now. May be everything will continue as before, and so no problem. But may be not. May be the pressure on legislators by public opinion will eventually force them to put a price to carbon. May be a high price like $200 or $300 per ton. Or maybe not. But the sole risk in the future starts to change everything for you CEO.
Bankers and investors run their numbers and realize quickly that with a cost of carbon at $200 or more per ton, your wonderful business plan is becoming unprofitable. Of course this might not happen, but the fact that it might happen immediately makes your business plan much less attractive.
The shadow of the future starts to play in full swing in favor of climate action
Bankers and investors start to be worried to lose money on your company. Your cost of financing starts to rise today. Worse, the long-term assets that you need to invest in today, but that are going to be high emitters of GHG, no longer find financing. Disadvantaged by this financing squeeze, your business starts to underperform vs others. In parallel, younger generations start to walk away from your company, closing the access to the talent pool that is much needed for sustained performance. And so, the doom loop is started.
Now if you are smart CEO you can fend-off the shadow of the future by publicly announcing a net-zero trajectory for your company, by 2040 or 2050. Investors will be happy and off your back. But what if you only pay lip service to climate, with a nice plan on glossy paper showing pictures of virgin rainforests and pristine sea? What if you delay the real hard implementation of the plan to your successor or even later? Will you get away? No, because fear will get you to act now.
Once again, bankers and investors have factored in the risk of carbon price. They don’t know if and when this risk will materialize, but they know it take an awful lot of time to decarbonize a business. So any plan with little action today and the bulk of the effort in the distant future will be seen as not credible. The financial pressure in the future is now on you today. Which means that you, today, as CEO, need to act and to follow an ambitious trajectory. All the more that everyone knows that the first measures to decarbonize are the easiest to take, and so the trajectory should start with a steep downward slope of emissions. And if this not enough, the insurers will add a little extra pressure: if you don’t start to act now, the insurance against future climate-related litigations will start to be revoked, both for your company but also for you and for your board-members. Not a happy perspective!
So now you are trapped as CEO. Either you start to deliver big on the net-zero trajectory, or investors will push you out.
Greed of investors and fear of CEOs to lose their jobs are forcing to act now
That’s how in the end, the climate can, that could have been kicked down the road for a long time, is suddenly jumping at you today, with an imperative to act.
And this is how the not so pure motives will force everyone to act in the near future. Getting us out of the "tragedy of the commons".
But for it to work, we need as citizens to increase the pressure. So as to increase the future risk that carbon might have a high price. So that today’s pressure on governments creates uncertainty on the future price of carbon. So that this uncertainty loops back, thanks to greed and fear, to force current CEOs and corporates to act now!
Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.
