We are very fortunate at STAND to have the opportunity to work in partnership with an eclectic mix of individuals who absolutely lead with purpose: this is what we STAND for.
One such individual is Paul Gilding, a man who has spent 35 years trying to change the world, doing everything he can think of. He’s served in the Australian military, chased nuclear armed aircraft carriers in small inflatable boats, plugged up industrial waste discharge pipes, been global CEO of Greenpeace, taught at Cambridge University, owned and run two ground-breaking sustainability focused companies and been a close confidant and advisor to the CEOs of some the world’s largest companies.
Paul recently gave a private talk to a group of financial leaders from around the globe that had convened in Singapore. STAND was also present, we were engaged to co-lead the strategy and output of the programme, entitled ‘The Future of Finance’. The author of this introduction (Jonathan Sanchez) is privileged to have worked directly with Paul on a number of other projects. Paul’s words are powerful, purpose-led and evidence based.
Below follows a brief unscripted talk he gave during the programme. Paul has given his permission for us to reproduce this, thanks Paul!
“The reality is, that today, we use approximately 150 percent of the earth’s sustainable capacity to feed the current economy. So we are requiring 150 percent of the earth’s land and water area, to drive our current economy today.
In addition, we have 7 billion, approaching 9 billion people, who want to live like we do. People who think they have the right to live like we do. Which let’s be clear, is not actually a “right”, but somehow this is how we think of it. But nevertheless it is a reasonable expectation of fairness.
Given the forecast growth that this will result in, between now and 2050, we’re going to go from requiring the resources of 1.5 planets to somewhere between 4 and 6 planets of economic capacity. Think about this as finance people. Put simply, we’re currently spending 150 percent of our income every year and depleting our capital in doing so. So, to stop us destroying our capital base and collapsing, to stop us hitting the limits of our ecology and economy, we simply have to get to 100 per cent.
Yet, for businesses today, the growth plan and indeed our whole model of progress is based on assumptions about a future of continued growth that is dependent on us consuming between 400 and 600 percent of our income by 2050. Do you think that is going to happen? The answer is no, it is not going to happen, it can’t happen because it is simple mathematics. This is the fundamental problem with being unsustainable, it means you can’t keep on doing it.
Unsustainability isn’t some moral cause, it is not about polar bears, or even about rainforests, or about feeling good. Its about being able to keep doing what we’re doing. So this all means our system cannot keep on going, because things that are unsustainable must stop. That’s where we are today and this is really important, not as a moral question, but as a question of our very existence.
One option is we can stop growing quality of life, stop feeding more people, stop alleviating poverty, stop putting in place toilets and washing equipment, stop washing our hair, and getting clean water, and having clean air. We can stop having transport, and stop doing all that stuff for the rest of the world. That is a possibility, but it is not a very pleasant possibility, because it will get very ugly if we stop doing that.
Or, we completely change the way we do business and the truth is that we are going to do – completely change the way we do business. I do not mean the incremental change that so many businesses believe will save us, I mean big scary transformational change.
The incremental change that business currently embraces, means that new competitors are going to be able to eat your lunch. They will simply get stronger and stronger until they’ve taken away your market, and you’ll be gone and replaced. Don’t worry about the environmental issue, it’s going to get fixed. What won’t be fixed is the future of those businesses and that believe they can survive through small acts: they won’t. We have a live example with electric cars Tesla now has half the market cap of GM yet sells just 30’000 cars per year compared to GM’s 9 million. So GM is such an old company that may not survive.
We have seen system change before, we have faced crisis on a colossal scale and made some successful fixes. It wasn’t that long ago in the bigger scheme of things that London had open sewers in the street, now it doesn’t. China had very very bad air, now it’s starting to clean up, and so on.
So, it’s all alright then? Why worry about it, it will fix itself, right? Well, yes, it’s sort of true, but it’s also not. In a way it is sort of true that we do fix these problems naturally, we do create a process across society that fixes these problems. Then we address them, and we move on.
But we’re in that process now and terrifyingly the current economic and global business model is basically a horse and cart company, facing the automobile. Or, a coal company facing the solar revolution. So, we will fix ourselves in the sense that markets resolve their issues over time, and that is that as we fix these issues, we will also destroy the old economy, the old models. The crucial issue is this, it’s not saving the world, it’s saving your business, your enterprise and your future that you should be focused on.
Understand this. Change is going to happen. We will fix climate change, inequality and the rest, because if we don’t, civilization will start to break down. The economy will collapse, and we’ll get into a very ugly place. The question for you to ask yourself is : in that process, ‘will me, my job, my business, my family survive?’.
I believe we have an obligation to our employers, families, ourselves and society to get this right. Companies are beginning to transition, like DuPont, which at 200 years old, has been able to transition to new systems and new models, or Unilever which has set ambitious public goals and targets. But if business as a whole doesn’t start this transition, chances are most companies today will simply cease to exist, because the economy will reject the old models. ‘Thanks Unilever, for all the shampoo and soap, we don’t need you anymore.’ That’s the choice, and this is where we are today.
Climate change is a good example of the way change occurs, but don’t think of the whole issue as climate change. However, it is the hardest, sharpest example of sustainability. What the scientists have been telling us, very clearly and consistently, for three decades is that if we don’t stop emitting CO2 and a range of green house gases, the earth will warm to the point where it will start to break down our economic system.
Many talk about this in terms of polar bears and melting ice caps. But what this really means is that human civilization will not grow and we will not have a stable economy if the earth warms by more than about 2 degrees.
That 2 degrees is an arguable and artificially specific line in the sand, but let’s call it 2 degrees as that’s the goal every government has agreed to act on. To achieve a 2-degree temperature limit, in terms of how much we increase the global average temperature, above pre-industrial levels, we will have to eliminate the coal, oil and gas industries, completely from the economy. This is just the beginning, and we must do it within the next 20 years That’s intense – no oil, no coal, no gas. It’s completely unimaginable.
But think about the alternative, if we don’t do that. We will walk blindly forward into a space where the global economy starts to break down. Climate change gets out of control. Sao Paulo running out of water becomes normal, in 20, then 50, then 100 cities around the world? The insurance industry will self-destruct, as it can’t afford to pay the claims. The food supply becomes so unstable, we’d have mass starvation, famine, and mass migration. We will sit back and simply say, “Well, that’s a real shame. What a pity. How about that?”
Of course, we’re not going to do that. We are not going to stand by, and let that unfold, and not respond. Our only two choices are, don’t respond and the system fails, or act and achieve the level of change required.
People ask if there was really that level of economic and financial threat in the market, wouldn’t we see it today? We absolutely are and it is happening now in the coal industry. Globally, pure coal companies have lost about 70 per cent of its market cap in the last 3 or 4 years alone. The arrival of solar energy in particular, has sliced peak pricing off most energy utilities. The European utilities sector has lost 500 billion euros in market cap, in just 4 years.
Therefore, this idea that we can eliminate the coal, oil and gas industries in 20 years, is not only possible, it’s not only imaginable, it is actually under way. But, this is not how we see the sustainability issue, we see it as a question of ‘environmental responsibility’. What I’m telling you is, it is actually happening today and having a massive impact far beyond those polar bears.
Let me close with a few examples, that I think we should be paying a lot more attention to. We all understand water as an issue. There’s a lot of talk about energy, around water, across global business and NGO’s. Sao Paulo, is a chronic example of this, a city of 20 million people, that has been teetering on the edge of running out of water, every year, for several years, right? I went to Sao Paolo last year and spoke to a group of academics, government representatives, and business leaders.
This is a city of 20 million people, on the verge of running out of water, driven by climate change, deforestation, lack of investment in infrastructure. These are all issues that everyone I met knew about. They all had great analysis and charts about threats and water supply, and these global issues, and what the impact would be.
But all of them were doing virtually nothing to get ready for it: the level of inertia was shocking. That is not unusual, because that is what humans do. We wait until the process is in our face, then we study it, make models for it, draft reports about it. So, we understand it really, really well, and we see the crisis coming.
Then we wait until the crisis is completely in our face, undeniable, terrifying, on the edge of destroying us, and then we wait for a bit longer. Then we respond, and then we panic and do something. That is the story of Sao Paulo, which is really a proxy for the systemic global issue I am describing to you.
What we need to do now is to take the analysis we have and get ready for what is going to happen. We will not grow our business, unless we address and leverage these issues. The world will not grow as an economy unless it addresses those issues. We’ve got the intellectual frameworks. Tax for example, is a good one. Moving tax from people to materials is very obvious and very simple and would drive massive economic change. That’s an interesting intellectual idea, so what are we going to do to actually make that happen? How are we going to drive change in society, in a way which is going to benefit business?
That to me is the big challenge that we face. How do we act, at a scale, and with intensity commensurate with the scale of the threat that we have identified? The system will change; it will save itself.
The question is, will you change with it, or are you prepared to face extinction?”
More information on Paul Gilding is available at: http://paulgilding.com
Paul Gilding speaks at TED: http://www.ted.com/talks/paul_gilding_the_earth_is_full?language=en
STAND Limited: www.standlimited.com
Errors and Omissions Excepted