By Anders Lorenzen
What role businesses should play in tackling climate change is probably one of the most controversial issues in today’s climate change debate. Many climate change activists are of the opinion that businesses will only delay action on climate change by watering down targets and promoting greenwashing activities.
But Philippe Joubert, who is the Founder and CEO of Earth on Board and is a Senior Adviser and Special Envoy for Energy and Climate at The World Business Council for Sustainable Development, thinks it is vital that in order to tackle climate change we involve businesses.
I caught up with him at the Economist’s Sustainability Summit in March.
Anders Lorenzen (AL): Tell us about your work to make businesses take the sustainability agenda more seriously.
Philippe Joubert (PJ): What I’m doing today is advising companies that they can put sustainability at the centre of their strategy and that it is fundamentally good for business and also good for the planet – business success is not possible in a world in shambles.
AL: Do you think we are starting to see businesses lead on sustainability issues?
PJ: Lead is a complex word in this case. I started to be involved with sustainability in Copenhagen at COP15 which was a big disaster. After that, I was involved in the run up to Paris (COP21), and Paris was a big success. The big difference between the two was that as a CEO in Copenhagen I was in a fantastic five-star hotel and was in talks with other CEOs. Whilst in another part of the city, governments and NGO’s were discussing the future of my business without asking me anything. In Paris people discussed with us and listened to us. We were not at the negotiator’s table, but we were ‘under the tent’, consequently in Paris we took our share of the big responsibility of scaling up and that is the big difference between the two events.
AL: What do you say to the critics who say that we cannot deal with climate change while we have capitalism?
PJ: Businesses are responsible for much of the impacts, but they have the technologies and the means to scale up the solutions with the speed required. So if we take businesses onboard, and give them the rules and the price signals, then they will take action, and the market will do the rest. But what we have heard from Myron Ebell that the market will correct itself is pure bullshit. The market will never correct itself alone. The market needs rules, the market needs guidance and price signals to act.
AL: You have alluded to the fact it is actually business that is setting the agenda and telling political leaders what to do?
PJ: First I would like to say I would challenge the wording, political leaders. I think it is better to say, political followers. Because being followers is what they are, other than rare exceptions of visionary leaders as we had in Paris COP21.
AL: Do you agree that the market is like a blind person who needs to be guided in the right direction?
PJ: If you want to be negative, yes. But, yes, business will need to be guided to arrive at the right destination. It needs direction – and long-term stable direction, and then you need governments that will work and the price signals. If you don’t get the price signals then the market doesn’t work; or it works but in a different direction.
AL: What I hear from business is that they’re fed up with not knowing what will be asked of them in the future, and with the lack of long-term planning. Do you agree with that?
PJ: Yes, sir, precisely that. Why are banks and businesses asking for a carbon price? Not because they like it or they are suddenly altruistic, they want it because they know it will come, but they don’t know when and they don’t know how much. That is too much uncertainty for them and they want certainty. So if you tell them $50 a tonne in 2050 they can deal with it, but if you say we are discussing, we don’t know yet – they cannot work like this.
AL: So what would you like to see happening in the next few years?
PJ: As a business community; clear rules. A clear vision of the Paris Agreement and the zero net society, because I think we’re wasting a lot of time talking about two degrees. We should go for a zero net society, which is much easier – exactly as Johan Rockstrom said this morning at the summit. I don’t know the exact impact of two degrees on my business and I don’t know what to do. So when you say let’s go to zero emissions that is clear and I know what to do. We also need a clear price signal that nature is no longer free. If you don’t give this you don’t let the market work correctly.
AL: Is it about putting a price on nature?
PJ: Putting a price on nature is quite complicated in the philosophical sense, so will it have to be based on pricing services rendered or impact. This means if you have an impact on nature like CO2 in the atmosphere you have to pay for it. We need money to compensate for the consequence of it and to change behaviours.
AL: What do you think about the argument that tackling climate change is something we can only afford to do when the economy is healthy?
PJ: This is a false argument. You will always have ups and downs in the economy. We are currently sending the bill to the next generation. When the guy* (*Myron Ebell, who had said at the Economist Summit that we must ‘trust people in the future’ to deal with the challenges we are currently facing) says it is too expensive to do now, let’s leave it for the next generation – that is a crime against humanity. And, by the way, some courts are starting to think like this. So this is not an argument.
AL: The court argument is interesting, because as you say you see some courts moving in that direction.
PJ: Two weeks ago a judge in South Africa refused permission for a new coal plant, for the reason they had not considered the environmental impact. So things are moving.
AL: Final remarks?
PJ: Yes, we need to talk about governance. This is something I was talking about this morning. The beast that is missing now in business governance is the involvement of directors. Because when you look at the governance, business directors are responsible for the long-term interest of the company, not the short term interest of the shareholders. If we are able to motivate them and point out that this is their duty, we will accelerate the scale for sure. Because they are sensible people, they understand. If you explain to them that this is their duty they will act. Let’s work with the board members because that is the solution long term. Not just the CEOs, but the boards.
Philippe Joubert was speaking to Anders Lorenzen in March at the Economist Sustainability Summit in London.