Businesses Are Facing a Tipping Point in Climate Action But Need to Address the Elephant in the Room

Ameen Fahmy via Flickr

Research from Pennsylvania State University has shown that the tipping point for large-scale change is roughly 25 percent.

That is, only about 1 out of 4 people need to take a stand before big change occurs. And this doesn’t only apply to social change. It applies to change within the workplace, as well.

Add up the growing number of forces putting pressure on businesses to accelerate climate action, and it appears we are well on our way to that tipping point.

Consider the mighty five exerting demands on business:

1.         Mother Nature. It’s a rare business that has no offices, plants, or people in affected areas; no upstream suppliers or downstream customers exposed to a changing climate; no reliance on natural resources or ecosystems; and no vulnerability to climate-driven political instability, resource shortages, or economic downturns, as PwC’s Global Chairman Bob Moritz observed. (World Economic Forum.)

2.         Shareholders. Investments in sustainable funds rose from $5 billion in 2018 to nearly 70 billion in 2021 – with more S&P 500 companies publishing ESG reports and some jurisdictions requiring reporting, as McKinsey & Company’s Barbara Tierney recently noted.

3.         Government. The new climate bill, the US Inflation Reduction Act, provides significant tax incentives for low-carbon technologies. Businesses that fail to make the transition will soon find themselves at a competitive disadvantage.

4.         Consumers. A growing number of consumers expect climate action – and will change their buying decisions accordingly, as the 2022 Edelman Trust Barometer report showed.

5.         Employees. In recent years, 1,500 Amazon employees walked off the job to protest the company’s lack of action on climate change. Microsoft employees wrote an open letter demanding climate action. And McKinsey & Company staff demanded full disclosure on client emissions. (For more, see this.) 

But a tipping point, by nature, has another side to it.

“Sometimes the world needs a crisis,” Maria Langan-Riekhof, Director of the Strategic Futures Group at the National Intelligence Council, and her co-authors write in a paper for the Brookings Institute.

Or, as Rilke more poetically and imaginatively expressed it: “Perhaps all the dragons in our lives are princesses who are only waiting to see us act, just once, with beauty and courage.

History, after all, “illustrates that crises and extreme threats can be useful for directing individuals, a country, and even the world to a solution,” as Langan-Riekhof writes.

One case-in-point she offers: The Deepwater Horizon accident, which led to an unprecedented oil spill, also led to the invention of new technology, called the Capping Stack,” which is now used in drilling operations worldwide to prevent similar catastrophic spills from happening again.

However, it shouldn’t take more crises to see the opportunities for businesses willing to do champion-level work on climate change.

Among these opportunities are:

•          Improved forecasting

•          Happier investors

•          Reduced costs/improved competitive advantage

•          More loyal consumers

•          The ability to attract and retain happier, more productive employees.

So, what's the vital pivot point? 

The willingness to see the elephant in the room – businesses need to get better about talking about climate change – and address it.

More on that soon.