Climate change is a long-term issue. It concerns 2050 and 2100. Businesses do not know how to think about 2050 let alone 2100. Management executives, have been taught by business schools to act in the medium term, up to the next five years. And climate change models, on which crises and decisions about the future of the planet are largely based, do not go hand in hand with business. What do we do and where do we start?
What is a climate model? A climate model is a simulation of the Earth's climate system produced using computer systems, and includes the interactions between the atmosphere, oceans and land. These models can be used to recreate past climate or predict future climate
But the following paradox occurs. While there is a plethora of models available from dozens of prestigious organisations that can help in strategy design, their use has not yet been introduced into the 'everyday life' of companies and organisations operating in the economy.
What is the role of businesses and other organisations? They are the engine of the economy. They are the ones whose actions will succeed or fail in the process of addressing climate change. They transact every day, carrying out billions of transactions of all kinds. To date, however, businesses and organizations have not had climate change in their management "toolbox". For example, while they are doing credit checks on customers or quality control on their raw materials and products, they are NOT checking the compliance of their transactions to climate risks based on what climate models predict.
So, while businesses are in possession of bottom-up data and information about what is happening within them and towards the economy as a whole, they are now being asked to fit into broader categories of new conditions in order to plan for their future. This applies not only to the more general socio-economic conditions in which they are called upon to position themselves, but also to their carbon footprint, which is a key element in the debate on dealing with the climate crisis. That is the 51 billion tons of greenhouse gas emissions that will not be miraculously reduced or eliminated. Each individual company is required to reduce its own and all together as a whole. So, while a business has so far only been concerned with itself to the greatest extent, from now on both itself and its surrounding stakeholders are 'counted' as a share in this huge global number. And one cannot claim: "I did what I could, let the others cut back".
Just private businesses? No. The above also applies to states, since they represent a large part (about half) of the economic activity of almost every country. At the same time, states are also the agents of change, with their regulatory interventions as well as by placing (often) new capital - investments where private parties are reluctant. But we must stress here that the interventionist function of the state is of secondary importance if businesses and organisations, individually, do not change their approach to climate change issues.
So, based on the above, it is clear that in order to deal with the climate crisis and change, we must first change ourselves. Not only as consumers, this is perhaps the least we can do. But as Managements holding the wheel of each one’s economic entities. Short-term vision and preoccupation is a recipe for disaster. At the same time, financial models need to "talk" to the climate ones, so that the economic assumptions complement the climate ones. We may not need to predict interest rates in 2050, but we can certainly identify, through climate models, which materials and human activity contribute most to warming, which activities are most at risk, and other key questions, and adjust our actions accordingly.
Read more (only in Greek) at https://www.powergame.gr/scripta-manent/279627/klimatiki-allagi-tropou-skepsis/