A Change of Guard in Uncertain Times

Out with the Old and in with the New

Two days ago, the election outcomes in Australia affirmed the Australian public's sentiment on climate change and the importance that people and communities place on their future. Anthony Albanese has ascended to become Australia's 31st prime minister, with the Labour party forming a government (albeit with considerable help from the Greens and independents). As is usually the case, new brooms are anticipated to sweep clean. The expectation is that Labour will act swiftly on climate initiatives and social inequalities, and other issues that slipped through the cracks with the previous administration. Leaders are all different, and their personalities, skillsets, confidence, biases, and relationships contribute to their strengths and weaknesses. Irrespective of which side of politics you stand on when promises are made and kept, change is good. If measurable actions are taken that demonstrate reform, then the transition from the old to the new is substantiated.

The Economy

The global market's economic impacts caused by global fractures and failures will soon ripple over into the Australian market. The immense stress caused by ballooning inflation is already tightening the budgets of average households, and the response of the newly formed government is likely to be an early friction point. Additionally, the ongoing discord of disjointed supply chains, pandemic woes, the war in Ukraine and protectionist mindsets will test economic and political relationships. It will be highly challenging for any leader to navigate the approaching turbulence. Mr Albanese and his government have a monumental task ahead to address these and other complexities, especially if there is a significant slowdown in global GDP growth this year, which could result in a worldwide recession.

These externalities have served to highlight the interconnectedness and fragility of global markets and their reliance on trade fluidity and exchange. Tighter labour markets (driven by Covid-19 impacts and restrictions) and successive surges of commodity price shocks have created a perfect storm for economists. Surging prices of everyday goods and commodities are yet to show signs of slowing despite the actions of central banks in raising interest rates. Unfortunately, rising interest rates are the only policy lever left for governments; however, it is likely to do little but further exacerbate the problem.

Eventually, supply and demand will reach an equilibrium as the market reaches a price point that is no longer sustainable. The trade-off, however, will be that falling demand will slow growth and lead to a stagnating economy that the new government will need to address urgently. Economic support pillars must be placed carefully beneath the Australian economy, and economic responses carefully considered to circumvent further distress to businesses and the broader economy.

Climate Change Activism & Leadership

Since the beginning of time, humans have generally taken the environment and the future as a God-given right. However, as man's intelligence and consumerism have reached extremes, so have humanity's environmental impacts. The world's natural wild places are rapidly diminishing, and the loss of species diversity is staggering. The negative impacts of human interference on once pristine wildernesses have taken their toll, making it critical to move the needle on climate matters. In response, countries and their governments have reacted. Australia has begun to follow in the footsteps of some western economies, but hopefully, their insufficient planning failures are not replicated by Australian leaders.

I am an avid activist for climate change and environmental and social good. Most people I know feel the same as they would like to see a world where future generations embrace greener living, cleaner air, less noise, the continuation of species diversity and a return to balance. It is essential to have social dialogue and systems in place that encourage work environments where all voices are heard and challenges can be discussed freely, without constant tension between opposing parties. Moreover, the ability to structure and prioritise issues in order for them to be systematically handled is paramount. Before this election, there was and still is a great divide between the right and the left. How leaders address this division will be critical to achieving sustainable economic and social development for all Australians.

A Calculated Transition to Green

The elephant in the room that must be addressed is the transition to green and its economic implications on GDP over time. Suppose Australia moves too quickly and does not plan for a steady transition from fossil fuels to renewable energy, we stand to replicate mistakes made by some European countries. These errors will place even greater pressure on electricity prices, thus impacting businesses and everyday consumers. Australia needs to be more self-reliant and resilient in the face of trade wars, sanctions, exacerbated political tensions and global uncertainty. If we move too quickly without methodical calculations to back up time escalations or move too late, errors in these critical decisions cannot be backtracked and redone once the wheels of change are in motion. Precision is the only way forward. Fact-checking, methodical research and planning are essential to make the necessary pivots to a sustainable, green economy.

As Mr Albanese joins world leaders and other newly elected presidents like Yoon Suk-Yeol from South Korea, there is an opportunity to forge tighter synergies for mutual prosperity and climate change. Providing responsible strategic direction from government to public and private enterprises will allow clarity to form around key issues. Strategic alignment,?not division, is required for meaningful change. Resilient people form resilient infrastructures, and the chain reaction of local, state and federal endeavours must complement one another to achieve common goals and outcomes that benefit all.

A Balanced Approach to ESG (Environmental, Social, Governance)

As governments and organisations move to mitigate risks associated with carbon quantifications or the lack thereof, responsible reporting and unity across market sectors must be realised. Founders, Directors, and Boards should all pay close attention to supply chain movements and the activities within environments that could negatively impact critical food, water, and energy supplies. Basic human needs rely on these necessities, which must be protected at all costs.

When issues arise, the solutions to those issues also present opportunities that companies must not ignore if they wish to capitalise on the transition to green. Organisations must do their share to help shift society toward a more circular economy. ESG laggards and those who choose to ignore the green imperative will eventually lose market share, replaced by ESG innovators and early adopters who are able to demonstrate that they can be trusted to do good for the environment and society. Business leaders are encouraged to focus on ESG initiatives and the intersection between ESG and ESV (environmental, social, value) catalysts.

Conclusion

The world is becoming more and more complex. Nevertheless, clear, calculated and unbiased thinking develops the type of policies that accelerate economic growth. This growth provides the support required for the middle class to lift the poor out of poverty through the jobs created by small to medium-sized companies. The economic and political horizons look daunting, with many moving parts and complexities. Australia has voiced its concerns, and the election has elevated Mr Albanese to a position of power and great responsibility. The ones who wield immense power must also deliver the results expected to unify the country and its people. Internal divides expose the country's weaknesses, which opens the door to exploitation from abroad. However, unity is a marvellous thing. If we as a people achieve the type of unity required to see through tough times, then Australia will be hardened in the fires of progress and refined in the oils of regeneration. Healthy optimism is the way forward, and Australia has the knowledge and tools to combat most issues, including climate change.