|Author Name:||Katrin Scholz-Barth|
|Date:||Feb 17 2021|
Think: Awake a different mindset for new business models and operation.
Act: Innovate inspired by nature.
Lead: Dare to create the future.
What does a global pandemic like COVID19 and the climate crisis have in common? RISK and CHANGE! Both require ACTIONS to avoid worst-case scenarios. But what exactly is the worst-case scenario? The collapse of humanity as the engine for economic development? An irreversibly uninhabitable planet?
What does it mean for executives to navigate a crisis, to lead through a global pandemic or climate change? There is no escape. We need to craft the ‘wormhole across the galaxy’ ourselves, no matter how uncomfortable, to manage increased risks and the high degree of uncertainties to protect people and businesses.
The severe negative impact of COVID19 was immediate. The virus spread at an instant and affected everyone in a globally connected world. So far, 110 Million people have been infected worldwide and nearly 2.5 Million people have died. The global economy shut down.
The direct link between COVID19 and the global economy is dramatic and undisputable. The global stock market remains in flux. The battle between counting the costs versus lockdown measures weighs heavily on leadership in both politics and in business.
While some companies suffered revenue losses or were forced out of business, others have managed to grow despite the chaos and uncertainty. But how does an organization prepare, become resilient and stay agile enough to pivot quickly during crisis?
The increased risks from global warming, a result of carbon dioxide emissions building up in the lower atmosphere, have been slower and less severe than COVID, which has made it easier to ignore or to write off as ‘one-time’ events. Executives have gotten away with dismissing science and prioritizing short-term gain over long-term impact.
Surprisingly, during COVID lockdown the world witnessed a different kind of short-term gain. Air and water quality noticeably and measurably improved around the world because of the reduced carbon emissions. The environment quickly rebound and started to recover. That is fascinating and encouraging.
From a business perspective this can be an inspiring and promising proposition. We need to generate economic growth and development that is decoupled from carbon emissions. The COVID year of 2020 shows just how ‘easy’ it is to reverse the impact from business-as-usual in a short period of time.
Now we need to turn business around with sustainable innovation ( as discussed in my previous article ) to steer industrial and economic development toward regeneration to advance both, a clean world and a healthy economy.
As it turns out, saving the global economy seems to be THE unifying goal to get ‘back’ to a new normal that is worth aspiring to. Scientists recommend a disciplined, hard lock down for 4 to 8 weeks to break the cycle of COVID19 transmission. Yet nearly a year and a half into the pandemic, we are still counting the costs and await the economic shock of a second wave of lockdowns. What is happening? Our behaviors, attitudes and leadership do play a big role.
“The habits of our life are like chains that are too loose to be noticed until they’re too tight to break.” Warren Buffet
The World Economic Forum reported that about 55% of the annual global GDP, that is USD47 Trillion (2019), depend on healthy biodiversity and functional ecosystems for value creation. Think bees for pollination for food production in agriculture, trees and forests for oxygen generation to breathe fresh air, and healthy soils for water filtration to drink clean water. These are a few obvious ones among the countless examples that are taken for granted.
Little to no economic value is currently attributed to these nature-based assets. They are just there and so far, have worked. Without pay. “None of the world’s top industries would be profitable if they had to pay for the unpriced natural capital they exploit.” John Elkington, Green Swans- The Coming Boom In Regenerative Capitalism.
But increased risks to these nature-based assets and services are starting to show up on the balance sheets. The current fossil-fuel economy has contributed to a 68 percent global species loss in biodiversity in less than 50 years (WWF, 2020) and an additional one million plant and animal species are at risk of extinction worldwide (UN, 2019).
Just as COVID19 has exposed the fragility of our global economy, aside from the health, human, and social costs, climate change as displayed in greater frequencies of severe weather patterns like drought, wildfires, floods as well as sea level rise and ocean acidification, has disrupted many industries and supply chains and will continue to threaten and adversely impact assets and wealth.
Business-as-usual within the current capitalist model is no longer fit for purpose. In order to secure uninterrupted value creation, executives need to lead with candor and take responsibility to appropriately manage risks, recognizing that profitability and sustainability do not come at the expense of another, but rather become the foundation for preparedness, resilience and agility, so critically needed for future-proof economies, healthy societies/communities and natural environment.
Leading people and businesses through challenging times requires rethinking and new metrics for measuring value, wealth creation, and impact to reduce carbon emissions, decarbonize the economy, reduce risks and create resilient businesses.
Successful business leaders of today and the future need to be a bit like The Renaissance Man; with expertise spanning technical, social, financial and environmental subjects. They will need to embrace the business case for strategic sustainability to protect all forms of capital, including positive cash flow, healthy human communities and functional ecosystems, to leapfrog into a clean future.
Responsible leadership means engagement:
No one person has all the answers. But the reality is that the climate crisis is as real as the global pandemic and cannot be ignored. The future belongs to leaders and businesses that are able to embrace change now, who, like top athletes, embrace the short-term pain and cost as an investment into long-term impact, because the cost of inaction only goes up.
Leading with compassion will give perspective to see the bigger picture. This is empowering. People will respond to a call to action, to take part in searching for new alternatives, to innovate, to instigate change and pivot to stay alive, literally and figuratively. With an engaged workforce, organizational leaders simultaneously improve their employees physical and mental health, build human and social capacity, and, even more important for the Gulf region, force a shift in work culture toward impact and to create a collective bright and clean future.
“At certain times in human history the generations alive at the time are called upon to perform heroic deeds. ... Today, we face just such a moment. Human progress and possibly human survival depend on our understanding and actions at this time.” John Liu.
This moment in history is called candid leadership through and beyond the Climate Crisis.
Hugh Arnold and Ross Woledge - Rotman School Of Management
Aug 06 2020
Sometime in the last decade the role of the CFO morphed from number cruncher to powerbroker. Gone are the days of the lonely accountant, kept isolated from the rest of the company. Today, the world's most successful CFOs are innovators who command a room and are sounding boards for the CEO.
Patricia Cullen- CEO Insight
Jul 01 2020
CEO Insight speaks to Professor Andrew Kakabadse, Programme Director of the Board Directors’ Programme at Henley Business School, to explore the increasing importance of boards and board engagement, and how to improve the performance of top executive teams, leadership and corporate governance.