Andrew Winston: Business in the Age of Climate Change

I think it needs to be said. I’ve been in the sustainability field for 13, 14 years, but Hurricane Sandy was a pivot point for me. I live in Connecticut and there were a couple days we were without power and didn’t know how bad it was yet. Then I got to the Philadelphia airport and finally saw the news. I thought, “Oh my gosh, this is here now.” It’s like the first statement of the National Climate Assessment saying, “It was once a distant thing. Now it’s today.” I love the quote from Governor Inslee from Washington: “It’s not a next-century issue. This is a next half-hour issue.”

What I’m trying to say is, things are getting urgent. The science is telling us we need to get rid of carbon basically in the next 30, 40 years. That’s just what we have to do. We either set the goal to solve the climate problem or we don’t. If you have a problem, you have to define how big the problem is. Once you know that, that’s what you have to solve. I don’t know what else you can do. But we are doing the “what else you can do,” which is just ignoring the end goal.

I actually believe we are seeing a change. It’s a reality [that the climate is changing], right? Ensuring that the basic underpinnings of our society keep functioning well is, as the UK’s Jonathon Porritt says, “pre-conditional.” That word sat in my consciousness for this book.

PricewaterhouseCoopers did this study on megatrends: urbanization, movement of power from West to East, demographic changes, technology, and climate and resource availability. I focus on these last two mainly because the others are moot if we don’t manage the fundamentals. No one’s going to care about cool new technologies or who’s in power if they don’t have food. That’s what “pre-conditional” means.

It’s just hard for people to see it because look, we’re surrounded by abundance. It just feels infinite, but it’s not.

They say they don’t. But it’s worse, actually. A lot of them probably do believe, but they say they don’t to get themselves reelected.

Partly through saying what I’ve always said, which is, it may not matter if you believe in climate change because [responding to the changes is] good for business anyway — you can save a ton of money, but also reduce risk and build more resilience. So I no longer debate climate — I just start by saying, “Because of climate change…” and go into the impacts while skipping all the caveats.

It’s still outside the core business, because these companies and leadership still have to hit the quarterly numbers. But one CEO I know said, “Yes, I think climate change is a problem. I just don’t know what to do about it.” A year before he was asking, “Is it really happening?” So, there’s migration happening, but change is hard. I would much rather deal with “I’m not sure what we do about it?”

We have to price externalities, and the first priority is a price on carbon. You can disagree of whether it’s cap and trade or through a tax, although I prefer a tax. I think that’s the cleanest and the most efficient.

We like to sit in business meetings and hate government. Then we kind of need them to set a standard and move the ball. Companies can do a great deal to move forward and innovate even without a price on carbon, but we likely won’t move quickly enough. The scale of change we need is larger than most realize.

The debate [at the Fortune conference] is how do we double clean tech investing? Well, if you believe the International Energy Agency’s numbers, we need to quadruple it — and quickly.

Unilever is the clear winner. They’ve made the concepts I outline in the book integral to their business, and it starts with the CEO Paul Polman. He talks about the world’s problems in exactly the way I’m writing about. They’re asking the tough questions. They’ve made sustainability the core strategy. It isn’t separate from their business strategy.

Did you see Exxon’s disclosure statement a short while ago? It was brilliant in many ways. Just a combination of facts and stretched truths and some propaganda, brilliantly mixed to co-opt the “stranded” word [from “stranded assets”] to say we don’t want to strand people in the developing world, purposely ignoring that nobody wants to restrict access to energy. That is, people in sustainability are happy to see lots more energy for people in the developing world. It just needs to be carbon free, right? If the fossil fuel companies want to be a part of the mid-21st century, they have to be an energy provider, not a fossil fuel provider. Lord Brown with BP, almost 20 years ago now, had it right when he said “Beyond Petroleum.” That was actually a big pivot even if he was too early for his company or sector to embrace it.

Oh, man. It’s funny how many of my talks I give [where] someone will come up to me and thank me for how positive they found the book — which was great, because my family sometimes thinks I’m a pessimist.

But you can’t be in this field without being kind of fundamentally optimistic. My old co-author, Dan Esty, always said something about short-term pessimism, long-term optimism.

I guess what gives me hope is I do think that people in the end are eminently practical. I think these things are happening, like Governor Insee said, “Right now.” You either adjust or you don’t survive. I don’t think we’ll have a soft landing. I think the science is now telling us there’s no soft landing. We’re going to have some serious problems. But I do believe there’s going to be a much different conversation over the next five years about what the purpose of a company is. I don’t mean companies should be the same as non-governmental organizations — I just mean it’s practical to operate in a way that solves these problems so we actually have a functioning planet we can do business on.