Avoiding Climate N(ot)everland

Avoiding Climate N(ot)everland?

So, here we are at the start of 2023.?If you’re like me, you’re hoping against all logical hope that the extreme weather events of 2022 were an anomalous event, not a portent of things to come.

Without concerted action, we know for sure that there will be more severe disruption visited upon us all. Sometimes though, to make a change, we need to have a clear vision of where we are headed and connect that desired outcome with the changes we make. If we can say “If I do this, then this good thing will happen”, then I am more likely to make the change. Seeing that connection is not always easy.

In this article I am going to try to use simple mathematic formulae to make that connection. I will use simple mathematics to show various climate change mitigation scenarios that we can control, to reduce the negative impact we have on the environment and society.

Would 4% annual reduction in emissions be too hard to achieve? What about 5%, 7.5%, or 10% annual reduction? How difficult would it be and what result would it achieve? (You will find the answer to both below).

By the way, when I say “we”, I mean individuals, companies, and nations, the latter two entities being groups or an aggregation of the former. In other words; companies and nations are made up of people, and “we the people” can impact change in all dimensions of life and society. ?I feel this personally, intensely and urgently, and I’d like you to feel that too.?We all want to avoid Climate N(ot)everland.

(That's me on a beach I'd like us all to protect.) But, for now, back to the math and the climate equation we are trying to solve.

Many nations and businesses are setting sustainability or emissions targets for 2030. We could debate the meaningfulness of the 2030 target date, but let’s just say for now that 2030 is a valid target date to use. (It’s not, but let’s go with it for now – for the sake of the math.)?

If at the start of this decade, you had set an emissions reduction target of 50%, and started working towards that in 2021, a constant compounded reduction of ?7.4% would be sufficient to reduce your emissions by half by 2030.?That’s 7.4% per year compounded over an active period of nine years – assuming a linear path from 100% to 50%.

However, if you’ve not yet got started, you’ve only seven years to go. You are running out of time, so you better get moving. In this scenario, your emissions reduction will have to happen at a faster rate; beginning today it needs to be a compounded annual rate of 9.425%, every year, until 2030.

But 2030 is seven years into the future? Where’s the urgency? Even if we wait another two years, what difference would it make? Well, if we wait longer to 2025, then, with just five years remaining, you would need to cut your annual emissions by nearly 13%, year on year, every year.

Oops, now you might be thinking that we have not yet considered any economic growth in the business and its (damaging) consequence on the emissions number.?Trust me. This is very important, and I’ve not forgotten it. It matters deeply and goes to the heart of our economic values. I will come back to that shortly.

A lot of the problems, the missed targets, the procrastination, the deferred projects, the re-prioritisation of the sustainability initiatives, the underfunding of emissions reduction activities, the gap in sustainable finance, the dearth of sustainability personnel, the missing voices from board room conversations, all come down to this ethereal 2030 target date. Nothing happens, or at least, nothing happens quickly enough.

This is Climate N(ot)everland. A distant oasis shimmering in glossy corporate reports, or national strategic climate plans, but failing to materialise. ?

Most companies are fundamentally incapable of planning ten years out. When did any enterprise last make its 10 year forecast? – never, never, never. That is why Blockbuster, Theranos, Sears, Borders, Vine, Brookstone, Toys R Us, The Limited, and Payless cease to exist and why Nokia, Kodak, and Xerox are no longer the force they were in the markets they once dominated.?Expecting corporations to act to a 10 year horizon is like looking for a toad in the desert.

With a few exceptions, when a company promises to be carbon neutral by 2030, they’re actually not making any promise at all.?They are certainly not feeling any urgency to act, because 2030 is just so far away. Here’s the thing: many of the people who are making those promises will not be in their current roles, having to deliver on those promises, when 2030 rolls around. And for now, they have “short-term pressures” to deal with and it is easier to go back to work and stick their collective heads in the sand of the growing deserts.

What does seven years look like when you’re 60 years old??It’s not that big a deal really, just about 11% of your lifespan to date. Doesn't time fly? Maybe nothing will happen.?Maybe the next generation can deal with this climate change thing? For the 20 year-old, seven years is a third of his or her life.?I can hear that 20-year old now. “A lot of shit can happen in the next seven years, someone needs to do something about it, right here right now. This is my future we as messing with.”

But the problem is, our countries’ leaders and those in the C-suite in business are all old, less inclined to disrupt, and less inclined to act precipitously.?In fact, according to a study by executive search firm Spencer Stuart, the median age of directors at S&P 500 companies in 2020 was 63, with 48% of directors being 60 or older. A sizable percentage of these people will die or retire soon. According to the World Health Organisation (WHO), about 10% of people in the 60-69 age range will die in the next 10 years. The U.S. Bureau of Labor Statistics in the US says the median retirement age is 62.?Many of those who are making those climate impact promises may not be around to deliver or be held accountable for the lack of urgent action.

Damn! Urgent, precipitous action is needed if we are to avoid Climate N(ot)everland, a land where we will all go to die. Anyone born this century should be really mad at their parents’ generation. I want them to be angry and looking for change.?They have a right to be angry. Just to be clear, I am of that Boomer generation, one of those who caused the problem that my kids now have to live with.?My life to date has been part of the problem. I am not proud of the havoc my generation has caused. We really screwed things up. The least we can do is admit the possibility of Climate N(ot)everland and try to understand what we can do about it.?Many Boomers are in positions of power and influence.?

Once more, back to the math …

Remember those 2023 target calculations??Those numbers were based on an assumption of zero (0%) corporate growth. The S&P has averaged 11.88% return since its founding in 1957.?Aggregate sales for the 2022 Fortune Global 500 hit $37.8 trillion, an increase of?19%.??It would be irresponsible to make emissions projections without factoring in economic growth.?The whole argument of de-growth as a strategy has yet to be made, but for now, it is prudent to factor in an economic growth rate into our projections.

Economic growth usually comes from increased consumption, and increased consumption almost always brings increased emissions. More materials sourced, more energy and resources used to manufacture products, more carbon used in transport and logistics to distribute all of the products through the whole value chain, where even in a very efficient circular economy, ?waste will happen, landfill will grow, and the overall carbon footprint of the entire operation will increase. Inevitably.

Back to the math.

Using my earlier calculation model, I will add a modest 6% annual commercial growth to my projections, and retain the 50% emissions reduction target by 2030.

Assuming that 6% business growth rate, if the company started its emissions reduction activities in 2021, the annual compounded emissions reduction would have needed to be 13.5% per year from 2021 to 2030.?This is achievable if you can significantly reduce emissions from energy by increasing your use of renewables.

Starting now in 2023, the annual compounded emissions reduction would need to be 15.5% per year from 2023 to 2030.?Now it is getting harder to reach that 50% reduction. In addition to reducing emissions from energy, you will likely have to look at a more sustainable supply chain, extensive use of circular principles, and reduced operating expenses (and the associated lowering of emissions) to approach the goal.

And if we wait to 2025 to start, the annual compounded emissions reduction would now need to be 19% per year from 2025 to 2030. In addition to the 2023 scenario, we are getting to a point where the growth rate need to be considered, and the business model might require some imagination, so an adjustment in the target might be necessary, though the reputational damage and competitive disadvantage should be considered.

To avoid Climate N(ot)everland, every day matters. The math is pretty clear. We need to be setting 2030 sustainability targets and act on them now. Today. Without delay.

While we consider the extreme climate of 2022, and hope it was a once off, we should pause of thought and reflect deeply. Will we see the same level of life-threatening heat across Europe? Will the devastating floods and storms experienced in the US be a common occurrence every year?

And our questions are not limited to just the US and Europe. In 2022,?floods in Pakistan and China, heatwaves in India and Pakistan, droughts in China and Europe, and several tropical cyclones in Asia and America?resulted in significant economic damages, exacerbating the direct health impacts an increasing pressures on food security, biodiversity damage, access to clean water and intensifying air pollution.

Is this what we should expect??Is this what Climate N(ot)everland looks like? I don't know the answer to that, but I do know that we need to act now to adapt to these changes, to mitigate future negative impacts, and where possible, to regenerate the precious land in which we live.

And how soon is never? Not ever.