“A CEO has lots to think about, and climate change is not on their forefront. Until it is.”
You can see the whole interview below, but when Jim McMahon said that, the megatrend I’ve been mulling over for over a month finally clicked.
Because climate change is already at THE forefront. Granted, not theirs. Yet. But here’s the thing. Everything changed last month when the UN IPCC assured the world that we can no longer escape catastrophic climate change.
That merits repeating. The world can no longer escape catastrophic climate change. When that conclusion is validated and officialized at the December 3-14 annual UN COP climate conference in Poland, as widely expected, we will have an easy prediction to make:
2019 will mark an adaptation watershed, the year resilience moved to the forefront, not just of corporate priorities, but of government action in most countries, as well as climate coverage by most major media.
I mean, hello! We have no choice. When it comes to companies, the subject of my conversation with McMahon, they face always-on, in-your-face challenges all the time, including underlying tech revolutions, shifts in global markets, the next acquisition target, new competitors, and more.
The main reason adaptation has not been on that list is the underlying, even unspoken expectation that climate change would be solved somehow, some day. Now that that’s gone, I would expect resilience to be thrust onto the boardroom with the same speed and resolve as when a fantastic new technology bursts onto the scene, or when a rival company launches a hostile takeover campaign.
Nothing rattles and focuses a Board’s attention, and moves members into “holy shit” urgent action, like an existential crisis, even more so than a great growth opportunity — when the company’s profitability, stock value, its very survival, is threatened by a large force.
Following October 8, climate change must be perceived, especially by smart, visionary leaders, as one such existential threat. Indeed, the greatest of all.
As they come around in the massive numbers I’d expect, look for them to flock to firms like McMahon’s The Climate Service and their scalable software solutions that quantify the climate risks those corporations face, for that is the logical first step.
The conversation with McMahon threw me back to Patricia Aburdene’s Megatrends 2010. You’ll recall her also as co-author, along with John Nasbitt, of previous Megatrends books. That one, though, she wrote alone and was subtitled The rise of conscious capitalism.
It included a great chapter on how companies would benefit fantastically by participating in and launching innovations to address the imperative of slashing carbon emissions and avoiding catastrophic climate change.
No sooner had the book published than a string of scientific studies came out all but guaranteeing that it was already too late for that and calling for an urgent refocus on adaptation to devastating climate changes no longer avoidable.
All the UN IPCC did last month was finally catch up. I guess they had to carry through the long-held mission and irresistible promise of striking what became the Paris Climate Agreement three years ago, and are prompted today not just by the October 8 report, but also by the utter inability of countries to meet their Paris commitments. Throwing in the towel became a foregone conclusion.
The name of the game now, we can finally ALL agree, is adaptation, to build resilience against what are certain to be escalating, progressively worse climate impacts as global temperatures go from 1.5º Celsius as early as next decade to approx 5ºC by century’s end.
This even redefines how we frame risk, since the “risk” of escalating climate change is no longer a risk at all, as in it might or might not happen, but rather a certainty. “Risk” in this context is what you face therein. When will a disaster strike? What part of my value chain will it hurt? And what adaptation measures must we take as a company, community, city and country, and when should we take it?
Just as any megatrend requires a default instinctive mindset to stay ahead of the trend, not just keep up, and capitalize on any opportunity it creates, so too must it now be with climate adaptation.
Consciousness, instinct and mindset in place, it’ll be time to equip oneself with adaptation talent, networks and tools.
The Interview: James McMahon
Today, the role of managing climate risks at a company is dispersed across numerous roles: financial risk, insurance coverage, facilities management, human resources, community relations, to name some.
The Sustainability manager, McMahon says, usually has a sense of how the team coincides on climate, but his/her role is usually focused on…well, sustainability. Resilience is an add-on. Starting 2019, look for it to become a separate position.
Another easy prediction is the absolute takeoff of what McMahon’s and similar firms do, running a company’s operation through Big Data analytics to quantify risks and opportunities.
Corporations, he posits, have been approaching adaptation in ways that fail to scale. “We’re throwing consultants at every single problem, and there aren’t enough experts to go around. This is why we built a software tool to do it. We have to use the power of technology to dramatically increase the speed and reduce the costs with which we can screen our assets. [Our] goal is to refine this technology to where eventually it can become accessible to the developing world [and companies that are] not able to hire an expensive consultant.”
Once you quantify these risks and opportunities, “that [becomes] the universal language that everybody speaks. The conversation shifts, and that mainstreaming becomes much easier. It’s no longer an environmental discussion. It’s simply a business decision.”
Or, until it is, a decision made when disaster strikes.
McMahon participated in a November 7 webinar entitled The intersection of financial risk and climate resilience. His exposition there complements his viewpoints here. Take a look.