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Friend of Tortoise Exclusive

Talk is cheap. What should CEOs actually do about the climate crisis?

Talk is cheap. What should CEOs actually do about the climate crisis?

This event is exclusive to Friends of Tortoise

in partnership with Capgemini

This ThinkIn was part of Tortoise’s Accelerating Net Zero coalition. Visit the homepage to find out more and join us.

Readout

The role of business leadership has been a recurrent theme at Cop, and there is a general sense that more than big words and lofty targets are necessary at this stage. Many targets are set for the mid-century, but the emergency is upon us now. So how can the “three legged stool” of business, government and consumer work together to guarantee a more sustainable future by addressing climate change?

Businesses ought to be thinking about getting ahead of impending regulation, retooling the fundamentals of their organisation to be low-carbon and nudging consumers towards more sustainable choices; all of this starts with leadership. 

Leaders are often at the centre of a large network. Rosemary Stark, a member of the Group Executive Committee at Capgemini, made the point that leaders are in a unique position to set an example. While legislation, carbon pricing and targets are all crucial, behaviour change also comes through social responsibility – and leaders can make this sort of change happen due to their wide spheres of influence. A multiplier effect, across a huge number of people, can result from the actions of one leader; whether it’s from them embracing more sustainable choices, championing climate-related reporting or steering the business towards greener practices.

Leaders are on the hook. First and foremost, the leaders of big businesses are accountable for their performance against targets. Rosemary went on to claim that all leaders in big high-profile organisations welcome the scrutiny and the challenge of meeting their commitments. With increased regulation around frameworks that enforce carbon emissions reporting, the transparency is becoming more real and enforceable. Leaders ought to be ahead of this curve, rather than catching up to it. 

Leaders can break new ground. Importantly, Fiona Howarth, the CEO of Octopus EV, argued that in order to hire good people, and attract good customers, leaders need to be embracing the changes that are underway when it comes to addressing climate change. EVs typify this change. In the market, good technicians, engineers, designers and ultimately drivers are all value driven themselves. This means the leaders who are slow to adopt the mindset of sustainability will find themselves unable to attract talent, or grow their market share in the future. 

The challenges of making this shift are very real. Likening a large business to an oil tanker, Fiona said that they are often “slow moving and hard to manoeuvre”. Leaders should be looking to see if they can set out on a “speed boat” that can be more agile, and lead the way both in creating new products and alerting people to the urgency of the climate crisis.

There’s a new mindset amongst leaders. The old, outdated view of a business’ purpose is that it must serve the shareholder. Increasingly, leaders are taking a more modern view, that business should serve the interests of all stakeholders. Thought of in its broadest sense, this means all employees and customers, and the environment in which they live. David Blood, the former CEO of Goldman Sachs Asset Management, explained that this means leaders are mindful of the broader interests and should operate with a license not only to pursue growth but to return stakeholder value in the form of sustainability and fairness. David added that the move to Net Zero is a question both of business behaviour and capital allocation, so it is in the “wheelhouse” of leadership to make that transition and ensure it is properly financed. The time frame is important also. Many leaders are making commitments they won’t be around to keep; so interim goals and shorter-term measurement are crucial. 

There are different types of leadership. The “lazy” kind is inattentive to the needs of the people and planet that support business, and less mindful of the proactive steps that can be taken now to address the climate crisis. The “attentive” kind is alert to the needs, but self-interested or tentative enough to reserve action. The “courageous” kind of leadership is the kind needed most now. It is the kind that would see leaders execute real changes, make detailed decisions about strategies for net seo and link performance against that strategy to remuneration. 

The need to lead by doing must persist beyond Cop when normality returns and other priorities creep back into the foreground. The next few months and years will be testing; not least for executive, leading businesses that need to make fundamental change. A note of optimism to end upon was that the mindset certainly does seem to be changing; now it must be followed by action.

editor and invited experts

Giles Whittell
Sensemaker Editor

David Blood
Founding Partner and Senior Partner, Generation Investment Management; Former CEO, Goldman Sachs Asset Management

Fiona Howarth
CEO, Octopus EV

Rosemary Stark
Group Executive Committee Member, Capgemini