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COP26 Takeaways for Business Leaders

12.22.21 | by Lori Teranishi
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ESG, Insights
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Because the summit in Glasgow achieved little to slow climate change in the near term, CEOs and other heads of large organizations should anticipate increased pressure from key stakeholders — especially employees and customers — to make major progress in ESG (environment, social and governance). Leaders already working hard to integrate ESG into their culture, business operations, investments and strategies, should continue along this path.

Why? Because even in the best-case scenarios, the planet’s temperature will keep increasing and the impact of climate change will become more devastating. This is becoming accepted knowledge worldwide, especially among younger people. A growing number of them do not believe enough is being done to avert worldwide catastrophe.

Glasgow will not alter this opinion. The meeting’s key objective was to develop agreements and plans sufficient to prevent the planet from “crossing the red line” — a temperature increase of 1.5 degrees Celsius above pre-industrial levels. Only extreme optimists believe this was achieved and they are quick to concede that creating frameworks is not the same as getting work done. Pessimists — who note that the leaders of China and Russia, both major polluters, didn’t even bother to make an appearance in Scotland — are disappointed and angered by the final agreement hammered out by the delegations. In their minds, catastrophic warming is a certainty.

 

“As the existential threat posed by climate change becomes more evident, people will seek to address it in all aspects of their lives.”

 

If the pessimists are correct, billions of people will be impacted by droughts, wildfires, man-killing heat waves, hurricanes, sea level rises and more. Many will become refugees as their homelands become uninhabitable. It is easy to foresee that the world order will be imperiled if many millions of desperate people try to settle in Europe and North America, whether they are welcome or not.

The sense that global warming, pollution and overpopulation are leading us to a grim future is growing among people around the world. They not only see frequent images of weather-related crises in news reports, but a growing number are directly affected by poor air quality, heatwaves and water shortages. A recent Morgan Stanley report informed investors that “the movement to not have children owing to fears over climate change is growing and impacting fertility rates quicker than any preceding trend in the field of fertility decline.”

This pessimistic outlook is influencing what people seek in their work lives. As the existential threat posed by climate change becomes more evident, people will seek to address it in all aspects of their lives. Around the world, employees want to be a part of companies that are working to preserve the planet and ensure a viable future. This desire is also expressed in people’s buying preferences and investment choices.

Business leaders can hope that COP26 succeeded in accelerating a wide range of initiatives to slow global warming. However, they should not expect key stakeholders to share their optimism, as environmental calamities are almost certain to worsen and proliferate over the coming years. Prudent CEOs should assume that public anxiety around climate change is going to grow even stronger, and that companies must respond to protect sales, maintain their social license to operate and retain the loyalty of their workers.

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