PRO PLANET www.ceotodaymagazine.com 44 What has changed? Money, of course. Mariana Mazzucato, author and director of the Institute for Innovation and Public Purpose, talked about how ‘finacialisation’ started in the 1970s to dominate everything we do. Financialisation happens when finance – the money things we do to enable profits – becomes more important than purpose. For example, when we build housing in the name of social good but only a few can afford what we build, then it is profit which is the driver and building housing is financialised. Financialisation prompts all manners of innovations to make our businesses more cost-effective, and after several decades of refining this approach, it is now so ingrained into our thinking we no longer feel bound by planetary limits. Today, technology is the magic we use to subvert nature and the leaders who attended COP26 all grew up believing this. They come from a period where the more technologically advanced the West became, the more able it was to fix problems: defeat diseases, close the ozone hole, end the Cold War, and even destroy ideologies. This allowed us to hold on to the idea that technology will always provide a solution. But we often get it wrong. What happens if we get net zero wrong? What happens if our circular economy ambitions turn out to be just more financialisation? What happens if having more renewable energy does not stop us from using more fossil fuels and creating more emissions? These are the real questions business leaders need to ask if their businesses are to fight against climate change. They need to put purpose above the need “to be seen to be there”. Technology may help us in the long term, but we have to cross over a very significant hurdle in the short term to get there. Have no illusions, it will cost. Recent estimates by Donald Matthews et al. published in Nature, one of the world’s most prestigious scientific journals, estimated we have a carbon capacity of 440 giga-tonnes left if we are to prevent warming from exceeding 1.5°. This was published in January 2021. The UN’s 2021 Emission Gap report indicated that 2021’s emissions would recover to 2019’s record-breaking levels. The amount is about 58 giga-tonnes. We will start 2022 with only 380 giga-tonnes left, and at the current rate of emitting 60 giga-tonnes a year, it is sufficient for only six more years. Everything we do uses up a part of that carbon budget. When you fly into COP26 in a private plane, you are using up the budget purely for yourself when it can be shared by travelling by train or at least on a commercial flight. Building a new electric car upfront uses about 10 years of a conventional car’s emission. If you switch your fleet to electric, it may look great, but it will bankrupt the six years of budget left. The same goes for everything else we do. Our push to recover the lost economics of 2020 is demanding so much electricity we are bringing mothballed coal mines back to life. We may point out we are the ones using clean energy, but our activities are all part of a financialised global growth that is pushing someone somewhere else to use coal to survive. What can CEOs of businesses do? First of all, lobby everyone in their circle to spread the message of cutting fossil fuel production. It will hurt your business, but if we are not producing it, we cannot burn it. It is as simple as that. When we do cut fossil fuel production, prices will rise. Shareholders of those fossil fuel companies will benefit financially from the suffering of others. However, the scale of suffering, if we do not cut truly, cannot be imagined. It is simply in the realm of pure “unknown unknowns”. Shareholders of fossil fuel companies must be engaged to consider how they feel in their gut about receiving this blood money. They should instruct the fossil fuel companies they own to distribute the share income to help people affected instead – to nominated UN development agencies, government social welfare programs, recognised charities, and so on. This changes ownership of a toxic industry into stewardship for the planet, taking care of the people and the environment. Shareholders can feel good about that, and everyone else can be credited for encouraging them to do the right thing. This will put the real challenge to CEOs. In a world with diminishing fossil fuel production, we can no longer act as if resources will always be there. To survive, we need to accept sales volume may no longer grow, and even decline. CEOs have to ask: “Does our product have enough real purpose to justify its use of the carbon budget and for other businesses and people to spend their carbon budget on when they too are facing unprecedented pressures?” To ponder this, CEOs can set the example of slowing down and doing less, in order to recover the spirit of the original 1971 Davos Forum.
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