Business can’t ignore climate change — and should embrace the opportunity

Over the past few years, climate change has emerged both in Canada and globally as a defining issue of our time. Ipsos polling during the 2019 Canadian federal election saw climate change elevated to one of the main “top of mind” issues Canadians are concerned about, trailing only health care and the economy. This trend is not restricted to Canada.

The Ipsos Global Advisor found that climate change was a “mid-range” priority worldwide but ranked near the top of the list in countries such as Australia, Germany, Great Britain, China, the U.S. and Canada. Worldwide, 80 per cent of respondents agree that “we are heading for environmental disaster unless we change our habits quickly,” and 82 per cent agree that “the climate change we are currently seeing is largely the result of human activity.”

These numbers are similar in Canada. There is no doubt that the world, including Canada, is concerned and has demanded action on climate change.

But who are they demanding action from? Traditionally, while citizens have expected governments to solve problems such as this, our data suggest the view of “who is responsible” is broadening. Seventy-nine per cent of the world — and 78 per cent of Canadians — say companies do not pay enough attention to the environment.

In Canada, some CEOs are stepping forward to articulate a vision on climate change. These calls to action are coming from places you wouldn’t expect. Alex Pourbaix, the CEO of Cenovus, an Alberta oil sands producer, announced on Jan. 10 that it would aim for “net-zero” greenhouse gas emissions by 2050, echoing a goal set by Prime Minister Justin Trudeau. Mark Little, the CEO of Suncor Energy, another major oil sands producer, noted that an energy transformation is happening across the world in his annual message to shareholders, while positioning Suncor as part of that transformation.

5:31 Climate change emerges as one of the top ballot-box issues among voters: Ipsos poll

We have seen this trend play out in the investment world as well. The most obvious and recent example is BlackRock chairman Larry Fink’s letter to CEOs. BlackRock is one of the world’s largest managers of financial assets, with its assets under management totalling US$6.84 trillion.

Fink wrote that “climate change has become a defining factor in companies’ long-term prospects. But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”

In a separate letter, BlackRock also noted that it would withdraw from investments that posed high environmental risks, as well as develop new investment products that exclude fossil fuels. This represents a significant shift in investment thinking, and it signals that climate change and environmental performance are becoming a major part of the investment process.

A clear and coherent statement on climate change is becoming a minimum requirement for those considering supporting or investing in a business. If businesses don’t have a climate change policy, they risk being left behind and considered poor corporate citizens.

In fact, having an environmental, social and governance (ESG) strategy has quickly become mandatory for many institutional and individual investors. A 2018 Forbes article estimated ESG investment at US$20 trillion worldwide. Laws that require ESG-related data disclosure are increasingly common. Investors and voters are demanding action from businesses and governments alike, and they want something beyond empty promises.

What people are not demanding, however, is action from themselves. In a recent Ipsos study, only 25 per cent of Canadians said they were willing to personally pay more than $200 a year to fight climate change. Close to half of Canadians said they are not willing to spend anything at all. Whether it is businesses or governments that are held most responsible for acting on climate change, most people think that responsibility ends when it comes to the individual citizen. And this may be the biggest problem of all.

It is likely that real progress on climate change will require personal sacrifices and changes in lifestyle. Businesses are pledging to reduce their greenhouse gas emission footprint, and investors are pledging to avoid companies that do not have a climate change plan and disclose their ESG data.

Governments are offering a suite of policy solutions, from carbon taxes to incentives in order to encourage people to make green choices and companies to invest in green technology, with limited degrees of success and virtually no consensus on which approach is the right one.

None of the climate change policies articulated by any of the political parties in the last election came close to meeting Canada’s commitments to the Paris Accord, which pledges to keep the increase in global average temperature to below 2 C above pre-industrial levels. No matter. Climate change policy has become a talking point used to attack the other party, and in the absence of government policy, businesses are recognizing they must step up and fill the void that governments are leaving by trying to have it both ways.

0:57 Alberta Court of Appeal rules federal carbon tax unconstitutional

This is happening, in part, because citizens are not willing to pay a personal cost. A carbon tax remains opposed by a slim majority of Canadians. SUV sales are still growing, and airline travel remains a preferred transportation option for many Canadians as they jet off on vacation. Though airline travel may decrease with the emergence of COVID-19, that reduction won’t be due to climate change concerns.

The problem remains a classic “tragedy of the commons,” where individuals assume that their own personal actions are neither necessary nor sufficient to solve what is truly a wicked problem. Climate change has become a massive public preoccupation, but it remains a problem for “the other” to solve.

Unless, and until, climate change is recognized as a problem that we all need to solve — businesses, governments and citizens alike — the burden will continue to fall on governments, and increasingly on businesses. Both will be expected to articulate solutions that will likely fall short unless individuals recognize how their own behaviour is a contributing factor to the problem, and decide to do something about it.

In the meantime, governments and businesses will be counted on to solve the problem for us and shoulder the blame if they don’t.

Gregory Jack is vice-president (Canada), Ipsos Public Affairs