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Forget Cancun: we need unreasonable CEOs

January 2011

In the wake of the latest underwhelming climate change summit, Geoff Lye, executive chairman of SustainAbility, argues that business leaders should stop looking for a governmental lead on climate change - and just get on with it

As I left last year's failed climate change conference in Copenhagen (COP 15), it dawned on me that the search for a new global agreement on climate change under the auspices of the United Nations is providing perfect cover for inaction by business leaders.

Take BP's then chief executive, Tony Hayward who, to paraphrase his words from the Copenhagen World Business Summit a few months prior to COP 15, assured us that climate change is not a problem for business. Let the world decide what it wants, he said; put in place the policies and regulations to deliver it - and we will comply. In other words, it is down to governments to set the rules and we in industry will follow.

Whatever happened to leadership and climate responsibility which reflects a company's values and principles? What happens if and when governments fail to deliver adequate regulation - is business as usual really an option?

The one thing we can be sure of - and informed business leaders know this too - is that the very modest outcomes from last month's Cancun climate change summit will not be enough to reduce the risk of dangerous climate change to an acceptable level.

A report recently released in London, prepared by climate scientists under the auspices of the UN, has calculated that if the signatory countries sign up to the Copenhagen Accord (and then actually deliver - not likely on past experience with the Kyoto Protocol), we would still not be cutting emissions enough to avoid breaching the 2°C global warming threshold - with the potentially catastrophic consequences that would entail.

A more dramatic outcome in Cancun would have been nice, of course. Establishing global frameworks and rules on climate change could be massively powerful in driving down the carbon intensity of the global economy. But any new rules of the game are the starting whistle rather than the end game itself.

To borrow the title of John Elkington and Pamela Hartigan's 2008 book The power of unreasonable people, perhaps the time has come to call on unreasonable CEOs to step up to the challenge.

Unlike democratic governments, chief executives can lead and inspire rapid and massive actions to reduce emissions. Just consider how swiftly Walmart has moved from a slow follower to a global business leader in squeezing carbon out of its supply chain; no government could move as quickly or as efficiently.

And Unilever's Paul Polman's recent pledge to double its business while halving the company's environmental footprint is nothing less than a paradigm shift in its underlying business model (see page one).

Compare, on the other hand, the actions of the world's largest public oil companies. Between them, ExxonMobil, Shell and BP's products account for about 15 per cent of global energy-related emissions over their full life cycle.

Their strategies have massive implications for succeeding or failing the 2°C imperative. If we judge them by their actions rather than by their words, we can track a growing commitment to energy security at the expense of climate security. Investments of all three show how BP and Shell have followed ExxonMobil into 'difficult' (for which, read 'risky') and 'unconventional' (for which read 'dirty') sources of energy.

ExxonMobil has at least been consistent and honest in its future pathways; whereas both BP and Shell have - far from de-carbonising their portfolios as promised at the turn of the century - aggressively re-carbonised them, particularly by investing in oil sands. Unreasonable CEOs can act unreasonably in breaking the status quo or, as in the oil industry in recent years, shifting the problem and the solutions on to the regulators.

At various times in recent years I have asked senior oil industry executives what they would do if we lived in a world of no regulation. Other than rejecting hypothetical questions (politicians take that line too), they clearly have no idea.

Surely, I press, this is when your company's values and business principles kick in? In other words, given that climate risks are at least as great as safety risks, should companies not set their own standards of responsible behaviour and measureable goals to guide their strategies, investments and business models?

And, if they do, would this not require voluntary targets for absolute emissions reductions and for squeezing carbon out of the supply chain (à la Walmart)? Blank faces. Unreasonable executives.




SustainAbility | Global | Climate change

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