What does a trend-setting CEO need today? Once, the answers were things like “a flashy business
strategy”, “MBA”, “fat pay check” and/or “corporate jet”. Today, there is something
else too: a “net zero” commitment, that sounds credible to most people (if not Greta Thunberg).
“What’s that?” It refers to the idea that a company, country or individual should not emit
any more carbon emissions into the atmosphere than they are removing.
Lots of companies and countries are setting these now. Some - like China - have pledged to hit net
zero at a time when most of us will already be dead (2060.) Others are aiming for 2050,
or even 2030. Either way, setting net-zero targets has become
a key tool to fight climate change, and a crucial example of how ESG works in practice.
Why does this matter? Imagine our environment being like a bath tub that is about to overflow.
As we all put carbon emissions into the atmosphere, we adding to climate change
which could be irreversible if the level of global warming exceeds 2 degrees, or so,
Scientists know roughly how much carbon will start that irreversible process - just as we
can tell when a bathtub will overflow if the tap keep running. And, as with a bath,
there are two ways to combat that process:
slow or stop the taps (ie stop adding carbon) or pull the plug (find a way to take carbon out.)
Tech whizzkids like Elon Musk and Bill Gate are pouring gazillions of dollars into the
second activity - ie hunting for ways to remove carbon. Maybe they will find that magic wand. But
since the have not done so yet, we need to slow the carbon flow now. Hence the net zero trend.
Is this good enough? Greta Thunberg would say “no!”. She thinks the carbon flow is still
way too high and voluntary pledges will not work. She has a point. But the good(ish) news is that as
those net zero commitments tumble out, new digital tools are emerging that should enable investors,
employees and governments to track the carbon flow - and how close disaster looms. Let us hope
we all use these, to keep CEOs honest. And here is another point: when Greta
first started talking about a “carbon budget” (or
jargon that environmental bathtub) many middle age executives ignored her - or scoffed. Today even
elderly CEOs are being forced to find their inner Greta; or at least make efforts to placate her.
If nothing else, that shows that the world can sometimes change in surprising ways,
within the ESG complex. No guarantee that it is enough. But begs a question: how much more
will society change in the coming years around that “E”, or environmental issues?
After COVID-19, it seems that nothing can be entirely ruled out.