Climate Versus Business as Usual

Traditional fossil fuel strategies geared toward ‘better, faster, cheaper’ offerings to maximise profit will be neither competitive nor relevant. | With New Year’s resolutions, forget SMART goals, spreadsheets and giving up on everything you enjoy.

January 2020 | Reimagine

Welcome

Welcome to the first Reimagine of 2020. This is also the first newsletter I have written for a long time. To keep you from the unsubscribe link I shall in future be more orderly and send one e-mail a month. Or thereabouts.

Everyone has heard of climate risks

Customers, regulators and investors know more about global warming than they did a year ago. Indeed, the world’s only exception may be actor Amanda Henderson, who believes that a Swedish girl called Sharon (Independent) brought the climate to our breakfast tables.

As people grapple with the threat of climate change, they see more and more how the actions of companies affect individuals, society and the planet. Industry’s reliance on fossil fuels has become one of the most pressing and grave challenges to ‘business as usual’.

Merely to survive, companies must adapt

A hotter planet will upturn longstanding – and often successful – business models. Governor of the Bank of England Mark Carney insists that companies that ignore the climate crisis and fail to adapt will go bankrupt ‘without question’ (The Guardian).

Business strategies that rely on fossil fuels will fail in one of four ways:

1) customers will leave for more sustainable offerings;
2) regulators will ban carbon-intensive materials and processes;
3) investors will withdraw their money;
4) or the planet, simply, will run out of resources.

Shareholders came first for 100 years

New expectations will recast the role of business in society. Shareholders – representing wealth creation – have come first for just over 100 years, ever since the Michigan Supreme Court in 1919 ruled in the case of Dodge v Ford.

Henry Ford had learned that the Dodge brothers, who were investors in Ford Motor Co., planned a rival car firm. This prompted Ford to announce his intention to position his company to ‘benefit mankind’ – cutting stock dividends so he had money to lower vehicle prices and increase wages.

The Dodge brothers needed cash to fund their own venture and sued Henry Ford for lost earnings. On passing judgment, the Michigan court stated that a business corporation was organised and carried on primarily for the profit of the stockholders (The Atlantic).

Nature is forcing a new business reality

Excellent for shareholders, the fossil fuel era gave cheap access to abundant energy and resources. As climate threats rise, however, companies will lose the moral and legal rights to make money so easily.

Whilst business can (and should, in my view) direct effort to creating wealth, executives must see also how the natural environment is forcing a new reality for capitalist systems. The runaway train of shareholder value (Quentin on Marble Brook) will not take us where we want, or need, to go.

Traditional strategies geared toward ‘better, faster, cheaper’ offerings to maximise profit will be neither competitive nor relevant. To thrive in the era of climate change, executive teams will have to reimagine the value they create for stock owners, society and the planet (Quentin on HRZone).

Beyond greenwashing, a low-carbon culture

Hearing this frenzied discourse on climate threats, many companies are trying to safeguard their reputations with high-profile PR campaigns. But regulators, investors and customers will see through greenwashing, and companies will suffer unless they take real action (Bloomberg).

We have to question old assumptions from the fossil fuel era, such as the belief that business and wealth creation somehow operate independently of the natural and social worlds. To thrive, companies have to champion low-carbon culture and practice (Quentin on HRZone).

Good resolutions start with s-x, not salad

This fin de siècle talk – firms’ going bust and old Henry Ford’s whipping by the Dodge Brothers – pains the heart and the mind. Climate-friendly business is rich with opportunity, yet as the hangover of 31st December lifts, we ourselves may benefit from a gentle fillip.

With New Year’s resolutions, forget SMART goals, spreadsheets and giving up on everything you enjoy. We want more pleasure, not less, in this sometimes drab world; so I offer ideas to get through those tedious routines that are so ‘good’ for us (Quentin’s website, moved from LinkedIn).

A favour, if I may ask

I abhor people who wantonly add my e-mail address to their mailing-lists, so have added none of my own contacts to Reimagine. I do plan over the next few months to use LinkedIn to find more subscribers, but also am keen to leave social media (for reasons I shall explain another day).

If you enjoyed this e-mail, then, it would be super if you recommended it to those who might like my ideas about the big questions business faces. People can sign up on the Marble Brook or my own websites.

Otherwise, I welcome any feedback on how I might make Reimagine both more enjoyable and more useful for you. Please reply to this e-mail when you have a moment.

I wish you well for a thrilling and worthwhile 2020,

Quentin Millington

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