Climate change and business leadership – It’s no longer business as usual
Our environment is changing. On top of South Africa’s economic concerns with regards to water and electricity, the massive implications of the COVID-19 outbreak has transformed the way our world will do business going forward. Uncertainty is rife.
As a business leader, you need to recognise it’s no longer business as usual. You need to be prepared to deal with this increasingly unstable environment. Chunka Mui, a Futurist, innovation advisor and Forbes contributor, shares three global warming solutions from the US Department of Defence (DoD) that businesses can take advantage of:
Acknowledge the risks
Mui summarises the real risks climate change places on our society, and the businesses that operate within it:
Whatever one might think about the causes of climate change, these effects will get predictably worse. The damages are not just physical; they can also damage social infrastructure and the political stability upon which all businesses depend. All risks should be identified and assessed so they can be properly considered.
Delving deeper into the issue of climate change, Mui explores how flooding, wind, wildfires and rising sea levels caused by climate change have impacted military infrastructure. He notes that businesses, like the military, are dependent on infrastructure, and in order to deal with these environmental threats, companies must “identify, measure and manage the escalating risks due to climate change, and to factor such analysis into strategic investments and decision-making, is simply good business practice”.
Plan and resource for avoiding climate risk
Someone’s sitting in the shade today because someone planted a tree a long time ago – Warren Buffet
While we may not be able to undo the damage caused by our abuse of fossil fuels, we still need to ensure we are prepared for whatever the future may bring. Mui discusses the importance of this:
A critical aspect of advance planning is to protect future investments. Any significant investment in new infrastructure should include a thorough climate vulnerability assessment of the proposed location.
One of the first steps the US DoD took in the battle against climate change was to assign part of their budget towards greater resilience of their infrastructure. Mui recommends businesses take a similar approach and increase the amount of resources they commit to protect new and existing infrastructure, as well as operations and assets.
Invest in energy efficiency and renewable energy to save costs, contribute to risk reduction and yield reputational dividends
The US DoD has always pursued more efficient energy sources in order to increase their chances of mission success and to reduce costs. Businesses can reap a number of benefits by moving towards renewable energy sources:
In the same way, business leaders should direct appropriate parts of their organizations to pursue energy efficiency, renewables and sustainability. The business case for cost savings and operational benefits is relatively straightforward. Greater management attention and urgency is needed to prioritize such efforts as if business viability depended on it—as it does.
It’s not just up to businesses – business schools also have a role to play
While current business leadership must rise to the challenge posed by climate change, the next generation of leadership coming through business schools must also be prepared. In the workshop summary of Climate Change Education – Preparing Future and Current Business Leaders, Dave Nagel, the Executive Vice President of BP America Inc. shared four ways business schools can help students prepare for climate change:
- Educate business students about the context and drivers of energy.
- Ensure basic science literacy for all business students.
- Update operations management and finance courses to include energy issues.
- Provide leadership courses that foster integrated system thinking.
Camilla Seth, the Executive Director of Environmental Affairs at JP Morgan Chase & Co. approaches the challenge from a slightly different angle. She points out that one of the key challenges businesses might face in the future is the inability of the environment to absorb the carbon that we produce through our energy generating processes. She argues that “to understand these issues, future MBAs need to embrace the concept of materiality (i.e., physical or material aspects that influence, or are influenced by, management decisions).”
Seth also focused on the importance of systems thinking and asked whether modeling should be considered as a standard part of the curriculum at business schools.
Prepare for the future of business at USB
The University of Stellenbosch Business School (USB) understands the importance of preparing our learners for an uncertain future. Our business school is the only institution in Africa to offer a Futures Studies programme, which helps prepare you to deal with rapid change and increasing complexity in the world. To find out more about this programme, visit our website or contact us today.