Why we need good leaders and good businesses for system–based climate action
The relationship between businesses, leadership and sustainable climate action.
Businesses have existed since the dawn of human civilisation. At their very essence, exchange has been about balancing unlimited wants against limited resources. Seen first in ancient civilisations from almost 3000 years ago, businesses have continued to evolve over time in parallel to societal development. From the ‘shreni’s’ in Ancient Subcontinent to the ones we know today in 2023, businesses still exist and are absolutely integral to the further development of modern practices and community knowledge.
But why? Historically businesses were key to expanding knowledge through trade, creating goods and services and establishing networks for societal connections. Nowadays the rise of technology has furthered the role of businesses as innovators. In finding solutions for complex problems such as climate change, businesses are considered key enablers returning to an age-old understanding of networks and community. Yet, businesses today still struggle to respond quickly. Before diving into why that might be, its useful to look deeper at the psychological understandings of value and human motivation underpinning business need.
Understanding Value — the need for liberation
From ancient civilisations to present day humans, psychological factors indicate a desire to explore beyond what is known and exchange beyond what is understood. One theory that could be useful to explain this phenomena is ‘Maslow’s Hierarchy of Needs’.
Maslow’s theory suggests that humans are motivated by a hierarchical structure of needs and explains that once the most basic of needs are met, more advanced needs are highlighted. A modern take on it presents overlaps between the five levels of Maslow’s hierarchy to exist simultaneously as needs develop. Taking this into consideration, the notion of fulfilling needs beyond a basic level can explain the reasons behind why the concept of trade, money and business first came about and why to this day, humans still strive for more.
While rising needs aren’t necessarily a negative factor, the actual issue lies in the pace at which limited resources are depleted in order to meet them and the emphasis on utlising natural resources that in their extraction and production produce harmful gases. In short, the problem doesn’t lie with the concept of business, but more with the method and processes of meeting such needs. Understanding this is integral to understanding the future of businesses, the importance of its leaders and its role in innovating for a regenerative planet.
‘Business as usual is no longer an option.’
Despite knowing this, as stated above, companies and their leaders are not responding to the threat of climate change fast enough. Looking into why businesses are slow to make this shift, let us review the systems in which businesses now exist.
Modern Systems — the role of business & business leaders
Today’s systems are grounded in linear, extractive models. Production and consumption value chains are part of these systems and utilise processes that focus on the short-term. Metrics and measurements used to guide decisions perpetuate this approach providing quarterly insights for shareholders. Breaking from this cycle is made more difficult by the lack of climate skills in the current workforce and the overall uncertainty surrounding businesses in wider political and governmental cycles. Global regulatory reform and other signals also influence the extent to which businesses can step out of line of their ‘safe’ processes. With an ultimate aim of self-preservation, businesses can remain stuck in a vicious cycle where economic growth remains the measure of success. Governments too remain restricted in measuring GDP and so the story goes.
‘If you look at companies which are growing what you find is that although their relative rate of emissions may be falling, their absolute emissions continue to rise. Which begs the question of whether you can decouple business growth and greenhouse gas emissions. Put simply, it is difficult to grow without using more energy, but ultimately tackling climate change requires absolute reductions in greenhouse gas emissions and that requires large transformational change within a business.’ Reference
Historically, this was never the sole aim of a business nor its only purpose. Businesses as, connectors of knowledge, innovation and community existed to offer multiple aspects of value. Business leaders therefore were well established members of community trusted to deliver co-benefits for their neighbourhoods.
Good Business, Good Leaders and an Altered System
‘Profound changes in technology, politics, the global economy and the rise of social media have reshaped the landscape for business. More and more business leaders are seeking models to guide them through shifting marketplace dynamics. People want businesses to do more than just earn profit — they want them to do good — they want them to create greater value and to positively influence people’s well-being’. Reference
Beyond ESG reporting, what can businesses and their leaders do? Adding to the solutions identified in article — Why does well-being matter for Climate Action, further areas of change can be recommended:
Altered systems is the necessary long-term approach to truly shift current paradigms. Learning from Donut Economics, shifting focus from financial value extraction to benefit generation can be significant. Reflecting on business purpose, governance, networks, ownership and finance can re-design the entire business cycle. Governments can assist by shifting into circular economy principles to focus on solutions that regenerate the planet and measure against well-being indicators rather than purely GDP.
Good Businesses can start to think along these lines:
‘The very way we do business sequesters carbon, cleans the air, pays living wages, and builds community — we’re here to make good things happen for society and for the living world.’ Reference
Good Leaders can start to reflect internally, understand holistic sustainability, undertake training to bridge the climate skills gap and review three key areas of improvement in mindsets to adopt greater inclusion:
- Adopt a learning mindset and focus on ‘Active Listening’
- Give to Give — not Give to get
- Be Authentic and Inclusive
While there are several ways of transformation, the reality is we are already behind. We need fast paced action and that requires transformation change across all levels including decision making. This will only be possible if governments, businesses and leaders cooperate to works together and shift towards planetary regeneration. Without collective effort, such a shift will continue to be frustratingly difficult.
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Thanks for reading! If you found this interesting, please also check out my you-tube channel where I explore new climate intersections using evidence-based strategies and tools that can help us better understand ourselves and our complex environment, to ultimately build a life we love on a planet that we need.
