A series of articles and opinions in the Financial Times at the end of January and beginning of February are indicative of how much has changed vis-a-vis sustainability. Gillian Tett started this chain off on 28 January with practical insight on the need to think “olive.” Whilst this focus on achievable change may not meet the demands of serious environmental activists and may not be enough to avoid climate change disaster, it does provide a route for many companies to start to make the needed change. It may well be that after taking initial and inadequate actions to address their carbon footprint, companies may discover they can and must move even faster and more fundamentally.
Ms. Tett followed up a few days later in an overview of how climate change is now seen as a profit opportunity – especially for Wall Street firms. She focuses on how Larry Fink of BlackRock realised in his personal experiences that climate change was real and a real threat to the economy. She goes on to highlight the challenge the environmental movement has had working with Wall Street and major corporations but notes a mindset change beginning around 2018. She now predicts that “2021 is likely to be the year that green meets Wall Street greed and fear. Finance sometimes moves in strange lines.”
But there can be roadblocks to this shift if boards are not adequately prepared to address the issues of climate change. Pilita Clark in the Financial Times at the end of January notes the lack of expertise at the board level. Corporate boards have long had a focus on diversity but it is clear from her discussion with someone knowledgeable about board composition, that this diversity push has not focused on the need for experience on environmental issues. I suspect boards are going to regret this lack of diversity in the very near future as they face increased demands to be environmentally positive.
Finally the Financial Times editorial board took up the critical issue of climate reporting standards at the beginning of February. Whilst covering the myriad efforts to create standards, they go on to note that “accounting standards that accurately reflect what risks companies are taking have a vital role to play in speeding up the transition to cleaner energy.” Clearly this reporting will be sorted out and investors and society will be able to judge on a standardised basis who is helping to address the climate risks we face and who is harming.
So 2021 begins with hope for a future in which money is channeled to address climate change risks. But hope tempered with the fear that it may be too little, too late.
