Sir Jonathon Porritt is advocating for a new reality: This is a time to tell the truth — unpalatable, painful and difficult though it might be,' he tells Gill South.
British sustainability thought leader, Sir Jonathon Porritt, has sounded the call that it's now time to act on climate change with 2020 a key year for businesses to make decisions to become more financially sustainable.
By the end of 2020, it will be five years since the 2015 Paris Agreement.
"2020 is the single most important year in terms of getting to grips with this challenge," Sir Jonathon warns.
Though 78 UN countries had set net zero carbon targets by 2050, these were too late. Targets for 2030 are a much better yardstick for New Zealand businesses, he says.
"This thinking about what you may be able to deliver for your organisation by 2050 is a waste of space." It is better to get used to a scale of ambition by 2030 and see what can be done to make that happen.
Porritt issued his warning to Aotearoa Circle business leaders — including from Air New Zealand, Fonterra, Mercury, Tourism New Zealand and Westpac — as well as government officials, at a breakfast earlier this month.
Porritt describes a growing feeling of "anticipatory grief", something which many individuals are beginning to feel more and more deeply today, even though New Zealand has been relatively sheltered from some of the extreme consequences of climate change. "This is the kind of grief that knows something is going to be inevitable in the future."
In that context, he emphasises the difference between what might be described as "accelerating climate change", where things are getting worse year by year, and "runaway climate change", where things continue to get worse so rapidly that there's nothing that can be done to actually stop that process.
"We have to own this grief — not deny it in the hope that it will go away. It takes many forms, but we have an obligation to ourselves to own this truth," he says.
He believes New Zealand businesses have a vital role to play to help heal some of the damage inflicted by New Zealanders on their precious environment.
All sources of natural wealth — soil, native forests, biodiversity, the oceans, rivers and lakes — need to be managed in completely different ways in the coming years.
And in this transformation, fairness needs to be at the heart of it.
Porritt is advocating for a new reality with both the business community and government having to think differently about how best to achieve a genuinely sustainable transformation in a capitalist economy.
He says there are five capitals — natural, social, human, manufactured and financial capital — and progress today depends almost entirely on converting natural capital into manmade capital, the consequences of which can now be seen to be disastrous.
Financial capital must now be underpinned by maintaining our stocks of natural capital on a safe and genuinely sustainable basis, Porritt says. "We have mismanaged them and exploited them without much thought. It's time now to think about how to manage these assets for long term value creation rather than short-term profit maximisation.
"It seems an easy challenge, but it requires a big change of heart for anyone involved in wealth creation. They need to be following a different mandate than the one that they are currently bound by."
Porritt says it is clear that all the climate research presented to politicians in the last 12 months has dispelled forever any lingering illusion that there is plenty of time to deal with this gathering problem.
"The problem is with us right now, and we have to deal with it over the course of the next 10 years."
The Intergovernmental Panel on Climate Change (IPCC) 2018 report indicated that it would be very difficult for countries to transform their economies in such a way that they can stay below an average temperature increase of 1.5 degrees C by the end of the century.
Porritt says it is important for New Zealand's business community and citizens to understand that two big areas of science — climate change and threats to biodiversity — were now merging in compelling ways.
At the same time, IPCC reports have made clear that climate and the natural world are inseparably linked.
He calls on businesses to be honest about what it needs from the government in its handling of the climate change crisis, urging it to do more that it might otherwise be inclined to do.
"This is a time to tell the truth — unpalatable, painful and difficult though it might be," he says.
Especially when it comes to contemplating the prospects of living in a world ravaged by the consequences of climate change, with floods, drought, and wildfires — all are a part of this picture.
The Aotearoa Circle is pushing hard to ensure this transformation is seen as a top priority by all business leaders.
Porritt says there has been a huge amount of new energy injected into the world of finance and capital markets over the last year, with some genuinely transformative thinking helping to reshape people's views of both risk and opportunity.
"For these momentous times, all boards of directors need to be very aware about the responsibility on them to think about climate risk in a genuinely strategic way."
The sort of rage felt by young people, such as that voiced by young Swedish activist Greta Thunberg, is going to become more and more part of their lives, Porritt predicts:
"This rage makes it impossible for adults to sit on the sidelines," he added. "We will come to realise that what we are doing today is not adequate, and that we have to listen a great deal more attentively to what I now see as a 'howl of inter-generational rage' from young people crying out at our inadequacy.
"We will all, as individuals, have to dig deeper into ourselves and find our inner Greta. If we don't find our 'inner Greta', a generation of Gretas will find us."
Politicians are being faced by young people and end up so "utterly exposed" at their completely true and authentic anger, he says. Change is coming whether we like it or not and it is wise to be right at the front of the change process.
Get stuck into the science, leaders told British environmentalist and founding Aotearoa Circle member, Sir Jonathon Porritt is calling on New Zealand business leaders to dig deep and truly understand the science of climate change and how it will affect their organisations.
Historically, most companies have seen climate change as something more people were getting worried about but wouldn't really directly affect their business model or their revenue projections but in the past five years, that has changed pretty markedly, he says.
"If you listen to the school strikes for instance, these young people now out on the streets saying you are not looking after our interests here. One of the things, particularly Greta Thunberg has said, is, "Look don't listen to me, you need to listen to the scientists, you need to really understand what the scientists are telling you."
So when the next Intergovernmental Panel on Climate Change (IPCC) report comes out, don't think of it as "just another report," says Porritt.
"You have to get stuck into that science and understand it. And understand how quickly it could disrupt all our expectations of future business models."
Business people are often very busy, preoccupied with short-term issues, firefighting of one kind, meeting expectations from shareholders, government and customers, he said. "What we are asking now is that business leaders have got to dig in a bit here, to understand what that science is and build a body of response to it that will be more in line with the nature of that scientific research."
The Aotearoa Circle's Sustainable Finance Forum is encouraging boards of directors and leadership teams to step up and take action on the challenges ahead: "It's for them to understand climate risk and then base their action planning and their future growth expectations on a proper perception of risk, rather than letting somebody else do it on their behalf," Porritt says.
While business leaders have a good idea of financial risk, he says they need to understand the whole area of non-financial risk in the changing environment.
In the past decade the area of non-financial risk, such as climate risk and transition risk, have become more important to boards of directors and to their audit committees.
"What we are looking at now is accelerating the competence that they have to manage climate-related risks. Some of that risk will be to their existing assets, so extreme weather events disrupting manufacturing or their supply chains," says the British environmentalist. Transition risk is where they may not be reading the signals properly, such as changes in government policy or regulation.
The investment community is now asking that boards of directors have carbon literacy, adds Porritt. Just simply saying this is not a relevant issue, when it's material to your future success is not good enough.
"You have to get literate in the world of climate risk and that requires some big changes."
Businesses should be seeking guidance and a structure from the Government as well as listening to their investors and consumers on tackling climate change challenges.
It's only the Government that can change the rules of the game, and companies can then carry out their activities as responsibly as possible within those different rules, he said. "It has to start with Government and it doesn't matter how progressive companies are. If you are operating within a dysfunctional system you'll still end up with dysfunctional outcomes," he cautions. "To those who feel they are behind on their approach to operating sustainably, there is time to catch up.
"I'm pretty confident if governments can step up and frame the market in the right way to encourage the best corporate behaviours, I don't see why that shouldn't drive an accelerated process of change in the corporate world."
Read the Sustainable Finance Report here.