Yes, we will overshoot 2° Celsius, but you can still redirect optimism, unleash a new wellspring of value, and become the brand that makes it through.
The bomb fell a month ago, when the release of this landmark climate sensitivity study ushered in a new moment, a turning point, in corporate climate management, confirming with final certainty what the business world has known but not embraced until now. And suddenly, the game changed.
Bottom line? Climate disarray can no longer be avoided. That hope, that we will fall short of 2°C, is gone. But there is a new source of optimism now: the hope that your company, in tight collaboration with others of like mind and soul, can make it through, maybe even prosper through, the disruption already begun and now sure to escalate.
The mindset leap is not huge. It is, in fact, quite doable, as so many companies have shown in their response to COVID-19. Beyond COVID, the winning move now is simply to expand your sustainability, from a focus on slashing carbon and solving the climate crisis, to the new priority of adapting to the severe impacts upon us and worsening from here to century’s end.
That makes this a huge story, the definitiveness of it, the implications of it, particularly if you’re the CEO, Risk Manager, Innovation Director or Sustainability VP of a significant company. Really, though, of any company, any size, any industry, anywhere on the planet.
In my conversations with many of you since, I’ve noticed the need for a clear-eyed interpretation, along with clarity on a path forward, given the recency of this discovery for most of you, and the magnitude for all of us. So here it is, in three brief sections for easy reading. Combined, they point the way.
1. That daunting science
Do you follow data-based management? Of course you do. We all do. And do you plan based on scenarios most likely to happen, as opposed to Hail Mary miracles? Yes, we all do that, too.
That’s why you invest and train your people for things like, say, workplace safety, because that expense is far smaller than the ones resulting from major accidents — in the case of COVID-19, from illnesses and all kinds of business disruptions. Your investment in robust insurance coverage is another suitable example. You invest today, based on data, to be ready for bad outcomes tomorrow. It’s what businesses do.
That is precisely the way to approach the latest climate science. It is the data you need, to plan for scenarios we now know will play out in the immediate and near term. Not heeding this data, or underestimating it, is exactly like ignoring or not adequately applying data that shows your customers switching to another brand, or a competitor about to launch a rival product or tech, or political upheaval in a country where your principal suppliers are based.
It takes bias-free, assertive, valiant leadership to receive such data and respond to it swiftly, dispassionately, effectively. To face the full implications, weigh costs and benefits, rally everyone involved, and pivot as needed. It’s what great businesses do, and more so in this context, because as you’ll see below, climate data is unlike others you’re accustomed to and therefore requires a new analytic and action toolkit.
In that spirit, last month’s climate-sensitivity study should already be at the very top of your agenda, the subject of frequent high-priority meetings. Because this is one of those disruptions, like COVID but bigger, that will rattle your franchise and corporate value in ways you must adapt to immediately.
The study says without the slightest equivocation that the Paris Agreement goal of keeping global temperatures from overshooting 1.5° and 2° Celsius is now an illusion. Were you counting on that in your planning, and that’s why you haven’t prioritized this more highly or invested more in adaptation and readiness?
Well, that is no longer a sound approach. We’re overshooting. It is now certain, and soon, and that’s the kind of data you should love, because there is no doubt. It provides clarity, and should trigger your bias-free, assertive self, the frequent meetings, and more.
The only question, then, is when will the overshoot happen and what consequences are likely across your operation, brands, relationships and locations. What are you adapting against?
The study says global temperatures will rise between 2.6°C and 4.1°C between 2060 and 2080, and that there is no longer any realistic way of avoiding that fairly catastrophic in-our-lifetimes scenario.
To help us fine-tune the timing further, numerous other studies coincide — as I summarize in this recent COMMON Facebook Live and as this study confirmed just last week — that the world is on a high-temperature path in the immediate and near term, between now and 2050, that will produce a 1.5°C rise as early as this decade (before 2030) and 2°C during the 2040s, followed by 3°C around 2060 and 4°C in the 2070s.
Yes, a chilling timeline. Could it be better? Might it happen later? Of course. But this is the probable unfolding at this point, given how fast climate change is moving, and therefore the one to prepare for and adapt to.
Nearly weekly, scientists tell us things are happening sooner than they expected — Arctic melt, monster storms and fires, long droughts and heat waves, viral pandemics (yes, COVID is itself a climate event). Look at last week’s NOAA prediction for the current hurricane season.
So to play the odds, as you do with everything else that requires probability planning — risk management, innovation/opportunities capitalization, HR management, overall strategic planning — this is the timing and scope you must own.
As to the implications, or to provide an idea of precisely what you’re readying for, the latest and clearest discussion was provided in this October 2018 UN analysis, summarized nicely here by New York Magazine climate writer David Wallace-Wells. They review what you should expect, or the most likely probability at each stop on the time-temperature scale — at 1.5°C, then 2°C, 3°C, 4°C.
We’re witnessing but the start of what will be — beginning already with COVID and other climate events, but more so later this decade — a series of interlocking, compounding climate events and consequences that will now definitely, without question and with historic clarity, define your future as a company and brand.
Is it dystopian? Yes. It is. Is there a voice inside you wishing it weren’t so? Yes, there is. Should you listen to it? No, damn it. This is now your data, the one you must place at the center of your thinking. Listen to the other voice, instead, the one surely pulling on you to do the smart thing: adopt the very best adaptation strategy and solutions and, whatever you do, do not fall short.
2. Of risks and opportunities
What strategy and solutions are those? At COMMON Future, we’ve spent the better part of the last two years answering that question, because what has gone for climate strategy and planning in recent years — the mainstream approach, as it were — falls abysmally short of what is truly needed, and now more so given this latest science.
There is, you’ll be glad to know, a new approach. We call it Deep Adaptability— inspired by the Deep Adaptation framework developed by Prof. Jem Bendell of UK’s Cumbria University — and have outlined it extensively in this series of columns in Predict, the Medium magazine focused, appropriately, on deciphering the future, including the future corporation.
Since the very future of your corporation is at stake, it’s a good idea, as with the links above, to go through these pieces. Best time investment you can make right about now.
Here’s a synopsis. Most companies continue to focus on sustainability, with gorgeous ESG platforms to reduce their emissions and improve their Environmental Social & Governance performance, under the notion that climate change can be solved and to capitalize on the opportunities inherent in being part of the solution.
ESG portfolios, in fact, have become a hot commodity in investment markets, and rightly so — so much so that we have launched a whole initiative to get ESG companies to lead the way on Deep Adaptability.
We’re doing it because now we know the world is barrelling toward an unavoidable overshoot, and it places your entire proposition and market value in a precarious position. Truly existential risk, but also a tremendous opportunity. So your ESG and sustainability imperative must change to prioritize the most cutting-edge adaptation program you can muster.
Luckily for you and for us all, this includes most if not all of your sustainability programs. You may not have to alter them at all. Why? Because we couldn’t avoid overshooting 1.5°C, but we are very much on time to keep the planet from overheating past 4°C, certainly on time to stay within 5°C as a worst case. It’s as if we were writing a book together and that was the headline: Preparing Today for the 1.5-to-5 Economy, 2030–2100.
Welcome to your renewed sustainability mission. As you press on with those solutions, you roll out new adaptation solutions. Put another way, build on your sustainability with adaptability.
Now, about those adaptability solutions, or your newfound resilience strategy to manage risks and capitalize on opportunities. As you expand your sustainability into adaptability, how should you go about it?
First, make sure you’re aware what not to do. Because thus far, the response at most companies is what can best be described as partial, first-wave adaptation, basically guarding physical facilities, supply chains and various assets against a 2°C temperature rise, and even then mostly underestimating the speed and consequences of 2°C.
If you’re modeling future risk, chances are the AI and pattern models informing your planning are falling short of the climate consequences you will actually face and must protect against, mainly because they fail to factor in climate-system feedback loops and the new realities of higher, sooner temperature rise as per the latest science.
McKinsey, in a recent climate-risk report I review here, calls this “model risk” and urges you to look beyond today’s models and weigh other risk parameters — including importantly, in this report out last week, the risk to your entire value chain from the coming wave of natural disasters.
In other words, risk management at the vast majority of companies acting on adaptation — yours included?—not to mention the ones still with their heads in the sand, is woefully inadequate, and that is something you cannot afford in this environment.
So, now that you know what not to do (and we’ll return to that in a minute, but from a different angle), here’s how you should proceed: by following instead a three-pronged approach.
First, adopt the latest science as your new data, and reconcile/align it with your existing plan. I mentioned this at the outset, in point #1 above when explaining the science. If you recall, though, I said this is an approach to data unlike any you’re used to. Here’s what I mean.
In this breakthrough report last year, researchers at the University College of London said it best. The dramatic course climate will take prevents “the accurate assessment of market risk. The assumption that [this] can be remedied via disclosure, transparency, scenario analysis and stress testing, which will enable markets to self-correct, is misguided, as climate risks are characterized by radical uncertainty” that undermines any search for clear, precise outcomes and therefore the reliability of any such data, the kind you’re accustomed to analyzing.
“Lack of scientific certainty as to the exact nature or timing” of climate change, they add, “should not prevent action” to guard against its impacts. But the action must break from the way we normally analyze and respond to risk and opportunities today.
A new skill set beckons, that is. Call it extreme future assessment, where you expand both your view of this different future and the range of choices before you, and produce a different kind of data to inform the process. The time has come to invent the future, as it were, so different will it be from present and past.
That brings us to the second prong, because while McKinsey’s model risk in the face of UCL’s radical uncertainty is spot on, today’s models, scenario planning and financial disclosures do play an indispensable role in getting you started and pointing you in the right direction. First-wave early adaptation thinking, it turns out, helps get you into the next wave.
And so Deep Adaptability incorporates TCFD, the Task Force on Climate-related Financial Disclosure, which I explain and analyze in this column. It has become the world’s leading standard on climate adaptation, a solid guide to assess and disclose your physical and transition risks, as well as your market opportunities — a fantastic initial resilience pathway.
Did someone say market opportunities? Just as sustainability spawned an era of dramatic innovation to slash carbon and conserve resources, adaptability is just now opening a similar lane to invent the future and build resilience, given the huge need for solutions that can help everyone everywhere prepare for what’s next.
The third prong to managing climate risks and opportunities, one most models simply ignore, is your people.
Here as well, McKinsey gets it right, when you combine this analysis with this one. The first urges you to take your fast and systematic COVID response, apply it to any and all disasters coming your way, and sustain it for the duration, which, as we now know, is forever, since always-on disaster management has become the irrefutable new normal. The second, in that same vein, suggests you become an agile organization, which is totally a people-centered approach. Adaptability, from our view, is the new agility.
“How can leaders avoid the impulse to abandon the [COVID] progress they have made in shaping a more productive and competitive company profile?” asks McKinsey. “We believe the answer is a renewed focus on people and their capabilities.”
Amén to that. Our fellow COMMON firm NOBL goes one step further: a COVID-19 Playbook to create a resilient culture. It was customized for the pandemic, but applies just as well to any climate crisis or string of natural disasters, including such organizational enhancements as event triggers, adaptive budgets, resilient leadership, scenario planning, innovation squads, and more.
At our shop, Deep Adaptability includes a method we’re calling Five Tasks, which counters, profoundly and systematically, the behavior biases that generally get in the way of an effective culture-change and innovation program.
You simply have to bring your people on board, and there are fantastic corridors to do exactly that.
3. Where is the hope?
That is the perfect segue way to the third and perhaps most mission-critical thing you need to understand about the latest climate science.
Of all those behavior biases, the most vexing in the face of such a historic challenge for any company is the Optimism Bias, that toxic human impulse that convinces people “it won’t happen to me,” it won’t happen here, that we’ll be OK, that somehow this entire crisis will be solved, or the consequences will be manageable and therefore no such grand adaptability initiative is needed.
You as CEO, your senior team, CFO, your risk managers, sustainability leaders — you can all, conceivably, avoid the bias and act accordingly. But the only way to execute a complete adaptation program at this level is when everyone everywhere in the organization is fully engaged and on the same page.
For that to happen, you’ll need to reframe optimism, because the Optimism Bias is inevitable. It’s our nature, to look for some hope, some positivism, some palliative to alleviate pain and discomfort.
To date, the default mode in the sustainability universe has been to downplay the coming consequences and make people think it won’t be that bad, lest they lose hope and fall into despair. In the media, reporters and experts keep falling back on the same warming warning: “The world will overshoot unless aggressive action is taken to cut emissions,” and that feeds the public’s optimism that more aggressive action will in fact be taken and the crisis will somehow go away.
Neither is true. The nugget to grasp here, though, from your perspective as a senior manager, is that you can’t afford to have your people clinging to this false hope. You need them fully engaged in your Deep Adaptability transformation.
To do that, redirect the optimism, redirect the hope, in a new and positive direction. Have them be optimistic and hopeful, yes, of course, but in other ways, suitable for the century we will actually have, not the one we wish we had.
I call it the 10-point New Hope Taxonomy, and it, too, is part of Deep Adaptability. Imagine this as a robust, sustained resilience training and motivation program for everyone at your company:
- We can already see that our unstable future is inherently different from the more predictable past we knew and loved. Optimism must be grounded in reality, and this is the inescapable reality. Let’s stop pretending. Let’s stop expecting what won’t be. Besides, even a difficult ride, a roller coaster, can be an exciting thrill ride. Let’s approach it that way. Yes, it will be hard. But hard can be an adventure to get into, even to enjoy. We seek that ride and experience in gaming, books and movies. Let’s ride and experience it in real life now.
- If there is one overwhelming competitive advantage as we dive into this future together, it is, in effect, adaptability. The most adaptable will win. So part of your hope, from a brand competition perspective, is to be the company that adapted so thoroughly that you’ll be the brand left standing as one competitor after another falls by the wayside because they did not respond and adapt with the same ambition and clear thinking. So unleash that competitive spirit. Strike powerful new partnerships, networks and collaborations with like-minded companies and NGOs, and navigate this journey…together. You can win. You can prevail. But only if you adapt at the highest, deepest level. Do not go it alone. Do not underestimate. Do not fall short.
- Next: wow, look at all the innovation that awaits. The future, as I said above, is so different that it must be practically invented from scratch. Who will? Why not have it be YOU? Solve migration, coastal retreats from sea-level rise, mobility and recovery from storms and fires, resilient food, resilient energy, resilient water, housing, transportation, communications, infrastructure, retail, sports, entertainment, breathability gadgets and outdoor gear for heat waves, more rapid pandemic response, and so much more. Talk about a source of hope and excitement!
- If the Optimism Bias blinds us, it is only because we generally base hope on an outcome we expect — in this case, a future much like the past. But this misreads our human nature in one critical respect, which we can call our Moral Code. Lots of anthropological studies prove that most people across history and even across the world today are actually more motivated, not by an outcome they expect to happen, but simply by being good people, doing the right thing, helping others, regardless of outcome — you know, the basis for religious living and consciousness thinking. For them, that is THE foundation of optimism and hope.
- Related to that, we find another anthropological source of hope: the indigenous mindset of being one with nature, even when nature turns nasty. In that inner place, optimism is not about an outcome, either, but about finding oneness, unity and peace with people and planet.
- Also related is Hopepunk, a cultural trend gaining ground around the world, mainly in literary and creative circles, where happiness and optimism come not from reaching a particular destination, but from getting into the journey — where you refuse to sit in resignation even if it looks like you’ll lose and instead find virtue in the struggle, in the game itself.
- If there is one thing we learn with each and every natural disaster, it is the inspiring way people put differences and animosities aside, even petty daily shit, and come together to help each other. Yet another reason to feel hopeful about what’s coming, because we know love is coming, mutual help is coming, solidarity is coming.
- And not just when disaster strikes. Solidarity can be created and nurtured during the year, every year, in advance of a disaster event. This is, must be, intentional. Organized. Since disasters are happening constantly in some part of the world or another, you and your people can be there, for them and for one another, in a readiness network that creates genuine hope that all will be better for it.
- The Kubler-Ross Five Stages of Grief provide yet another source. The first stage is Denial, where typical Optimism Bias does not allow you to acknowledge a bad event. I’m not referring here to the politically driven denialism of the conservative right, but rather to the one driven by honest fear, grief and apprehension in the face of a daunting event. The good news is that this is not a static process. No one stays in Denial and despair. We move on to the other stages, including that dark room where we grope and search until light emerges and we find our way to the 5th stage: Acceptance. So it’s OK for your employees and stakeholders to feel some grief and pain. Don’t hide facts and truth for fear they won’t handle it. They will. They will move through the cycle and emerge empowered, stronger and better able to manage whatever the climate throws their way. The evidence for this is voluminous. (More data-based management!)
- Speaking of fear. Truth not only creates new pathways. When it’s hard, it also shakes complacency. This is why so many studies point to the effectiveness of fear as a motivator, including fear of a difficult-climate future. We fear disease, so we improve our health practices. We fear our children will acquire bad habits, so we model good ones. We fear God, so we adopt good behavior. We fear this future, so we will become deeply adaptable and help make the company stronger, more resilient, more competitive, the brand left standing. There is hope in fear.
The new wellspring of value
Put all of the above together, and what you have is something rather unexpected. Because yes, when you first read the latest climate science, it seems like you’re peeking into a dark, ugly, now inevitable unfolding — and, in fact, you are!
Deeper reflection, though, reveals an entirely different, far more hopeful way of looking at climate risk.
When seen through the lens of Deep Adaptability, the reveal is incalculable value for your company, where you turn sustainability programs and innovations into adaptability programs and innovations; protect all assets and brands; retain talent and customers; outlast all competitors and gain market share; and build a culture where everyone everywhere prepares and reacts beyond the call of duty, where the fire of hope feeds a vision made for the times and is not distracted or misled by plans no longer viable.
COVID has revealed to the world the fragility of the world. If a pandemic at 1.2-or-so degrees Celsius brought down all markets and disrupted everything, think what 1.5°C, 2°C, and beyond will do, across every type of compounding, worsening, overlapping climate disaster. And then develop the new skill set that allows you to become a winner in this, the most challenging time in human history.
Go back to the science and scenarios, deep into the data. And then go forward to what you can do, what is in your power to do, to become one of the most adaptive companies in all the world.