THE ADAPTIVE CO: The future corporation will be built on these climate feedbacks
If your company is digging into climate science and assessing threats and risks, fantastic. You’re on your way to building a brand for the future. If not, what are you waiting for?
Either way, you wanna make sure you’re looking at the right science, not just the one we’re all reading in the news or even the variety produced by machine-learning forecasts and AI modeling. Even IPCC reports and all official climatology produced by governments and NGOs and repeated in media reports tend to exclude tipping points and are therefore far too conservative, with windows softened and extended farther into the future than is warranted by the science. To plan and adapt, you want the truth.
Today, the truth has come down to three basic tipping points, two science-based and one economic (triggered by the first two). Oh, there are dozens more, but in the immediate term, to get your team going and launch a solid corporate adaptation plan, focus on these.
We all aim for data-based management and spreadsheet-informed systems. But when it comes to tipping points, try another skillset. Because historical data, the one that informs forecasts and models, does not apply when tipping points kick in and spike global temperatures into uncharted exponential territory.
Those future scenarios have never been lived. There is no historical data for that. So do look at the forecasts and models. They’re useful. But don’t stop there. Adaptability requires weighing consequences based on scenario thinking and shared team instincts, and that’s the additional exercise to create.
As a team task, this is as exciting as it gets. There is something about us humans that pulls us into the adventure, into exploring the new, even the dangerous. We live it out in dystopian games and movies, in suspenseful books and stories. Consider this the real-life, real-time corporate equivalent. Frame it this way when challenging your team to face the unimaginable and produce the best possible adaptation plan, unfettered by their human biases, when you huddle around to think through the unthinkable.
Because the future of your company and all of society must be thought through. No scenario, no matter how daunting, can remain unthinkable.
Frame it also in the context of probabilities. Recall the mindset outlined here. Every business prepares for the probable, not for the miracle. Now that escaping terrible climate consequences would be a miracle, you must prepare and adapt for the future actually coming, knowing it’s the near future, the one to adapt to immediately. Don’t allow your team to be paralyzed by uncertainties and ambiguities.
Rather, turn them into probable scenarios for your company, into probabilities and bets so likely they should weigh more heavily and drive corporate action.
It begins with the tipping-point science, the subject of this piece. We’ll dive into consequences and scenario thinking in another column. (For an idea of what that’ll look like, check out this article. But again, careful with the conservative, extended windows.) This one looks at the basic, most immediate tipping points.
The place to start. The reason why climate change has become irreversible and unsolvable is because there is a 10–15 year lag between the emission of carbon and a rise in temperatures.
Today’s temperature rise is created by carbon in the atmosphere from 10–15 years ago. Scientists expect that the 35–40 gigatons of carbon we emitted annually since, will produce a rise of roughly 0.5°C this new decade, more than in previous decades because more carbon was emitted in the last ten years than in any ten years ever before. Likewise, the 35–40 annual gigatons unavoidable between now and 2030 will probably yield another 0.5°C next decade.
Temperatures have already risen about 1.2°C since the start of the Industrial Revolution in 1750. Some studies indicate it’s been closer to 1.4°C. The 0.5°-1° from Committed Warming will throw us past the 2°C scientists have been warning about for decades. And that’ll do it. Far sooner than you may have heard.
The high probability for you to prepare for is that the spike will begin this decade, worsening climate conditions to unprecedented levels. Ignoring or not responding to this likelihood is a really stupid thing for any business manager, director or investor to do.
As we approach 2°C, the Arctic is expected to go ice-free every summer, and lose ice permanently the rest of the year beyond that point as temperatures continue to rise. Some studies show it going ice-free well before hitting that threshold, as early as the mid-2020s — again, rather immediately.
With the sun’s rays absorbed by open ocean instead of being reflected back upstairs by ice cover — known as the Albedo Effect — the Arctic has been warming faster than the rest of the planet, pushing temperatures higher still, by as much as 0.5°C between this decade and next, on top of the rise from Committed Warming.
And not just Albedo. Methane, too. That is, a warmer Arctic means the long-frozen permafrost has begun melting and unleashing methane into the atmosphere, a more potent greenhouse gas than carbon. Scientists can’t be precise about the timing and extent of this hike, but from your perspective, just knowing the methane genie is out of the bottle and will grow from here is sufficient basis to rush that adaptation plan into action.
That is, Committed Warming and the Albedo Effect will boost temperatures, and that in turn will spike methane and boost temperatures further, starting this decade.
But wait, there’s more. As the difference in temperature between the Arctic and the Equator shrinks, jet-stream winds and ocean circulation are both expected to slow.
And here’s the punchline: the combination of higher temperatures and a disrupted jet stream and ocean current will highly likely lead to a dramatic spike in the frequency and intensity of extreme-weather events, sooner and more than you’re reading in the news and getting in climate models.
Insurance and Banking
Here’s the economic tipping point being triggered by the two natural ones. At a temperature rise so far of 1.2°C, extreme weather is already a new normal. Insurance and reinsurance companies are shaking. When they peek into these higher temperatures and far more extreme weather events, the highly likely scenario to now plan for and adapt to, the very viability of insurance coverage is being called into question. This is not abstract. Temperatures will overshoot 2°C next few years and worsen climate conditions exponentially after that.
Now, as insurance becomes either unaffordable or unavailable, what do you think banks will do? That’s right. Tighten credit. And as insurance and credit both become unaffordable and unavailable — heck, as increasingly more terrifying extreme weather (fires, storms, floods, droughts, heat waves, cold waves) crushes whole cities and regions and produce paralyzing supply-chain scarcities in our inexorably interconnected global economy — what do you think will happen to growth and jobs?
More to the point, what do you think will happen to your business? What are the repercussions, the implications, for each of your sites, brands, suppliers, employees and other stakeholders?
These are questions I have yet to see raised in any conference or significant business forum, and yet, these are THE questions we must raise as serious, mature business people who care about the future of our companies and industries, not to mention the future of humanity.
Imagine 2008, but deeper and without a bailout or recovery. The high probability today points to a collapse of the global economy under the weight of increasingly worse climate impacts and a systemic disruption from insurance and banking. With temperatures highly likely to rise irreversibly and exponentially, it seems a lousy bet to expect a traditional recovery. And then what?
The scenario to prepare for and adapt to keeps getting clearer, doesn’t it? And that is the very first step, to clear the ambiguity, feel greater certainty, proceed with more clarity. None of this is to say you, your company, can’t make it. Only that you must start thinking this through and getting ready.
Your future starting this decade is post-2°C. Let’s become super literate about what that means, what that will look like, and what your company must do, enterprise-wide, all hands on deck, to adapt.
Alex Díaz, a leading thinker and analyst in the fast-emerging field of corporate climate adaptation, has a long career spanning business journalism, strategic communications, sustainability management, and stakeholder initiatives. He lives in Puerto Rico, at the entrance of the Caribbean hurricane alley, and runs adaptation studio COMMON Future, an affiliate of global social-enterprise collaborative COMMON.