One of the interesting features of COP21 is the prominent role of CEOs of big private companies. Indeed, former leader of the UK’s Labour party, Ed Miliband, has cited how CEOs are among the strongest voices calling for government action on climate change.
But this is a bit counter-intuitive for two reasons. First, there is a stereotype that business leaders are generally allergic to any kind of government intervention in the economy. Secondly, on the climate in particular, people generally associate stronger government action with rising energy bills, meaning more cost for business.
So why would business leaders be among the strongest voices calling for government action?
We’ve been leading a research program on this at Ashridge Business School for the past three years, working closely with CEOs so that we can offer an informed, authoritative answer to this puzzle.
In short, many business leaders now realize (partly through education and research by business schools) that climate change is both a source of cost and a source of opportunity for their businesses. But government action is required to both reduce these costs and maximize the opportunities.
For example, the impacts of climate change on agriculture already costs Unilever €200 million per year — and this will get worse. Philips, on the other hand, is making more and more money out of energy-saving LED lighting, and government action that made energy-guzzling alternatives more expensive will allow Philips to make even more money, as well as make a bigger contribution to curbing climate change.
Generally, business leaders recognize climate change needs to be addressed, and that a stable, long-term regulatory approach is required so that they can make long-term investment decisions with confidence. For all of these reasons, they are calling for strong government action in Paris.
These themes have been a compulsory feature of the Ashridge MBA since 2005. Ten years ago, students objected. Now they love it, and are choosing our school because of our curriculum and research reputation in this area. In particular, they love the idea of learning how to tackle complex global problems like climate change through business solutions.
The Ashridge MSc in Sustainability and Responsibility pursues the same principle, in-depth. It trains people to lead system change to help business be part of the solution to these problems. For example, two of its alumni set up the Carbon Disclosure Project, one of the world’s leading investor initiatives on climate change, which is at the heart of the Paris summit. These themes also feature in our executive programs.
Finally, climate change is at the core of the Hult Prize, the world’s biggest student initiative on social entrepreneurship. Teams of business school students from around the world are challenged each year to come up with a business idea for tackling a complex global challenge.
If we’re to stand any chance of winning the war on climate change, the leaders of today and tomorrow need to heed the advice that is coming out of business schools from around the world.
Matt Gitsham, of Ashridge Executive Education, which is now an arm of Hult International Business School, is an expert in sustainability and corporate responsibility research.