Sean Bourke, Managing Director, Pearse Partners; Mohadeseh Abdullahi, Molten Ventures; Katherine Howells, Senior Consultant, Pearse Partners, and Gabriel Thoumi, CFA, FRM, CEO, Responsible Alpha (L-R).
The Intergovernmental Panel on Climate Change (IPCC) launched its final Sixth Assessment Report (AR6) report after a grueling eight-year-long process assessing tens of thousands of scientific studies.
“It is unequivocal that human influence has warmed the atmosphere, ocean, and land. Widespread and rapid changes in the atmosphere, ocean, cryosphere, and biosphere have occurred.”
Our best estimate of warming is 1.07°C increase above 1850-1900, compared to 2010-2019. A bulleted summary reads like a catastrophic Hollywood movie:
Highest CO2 concentrations in 2 million years.
Last decade was warmer than another decade in the past 125,000 years.
Ocean warming faster than at any other time since the end of the last ice age.
Sea level faster now than in any prior century for the past 3,000 years.
Yet business goes on, the news cycle continues, and government action lags while alarm bells ring louder and louder.
Remember, our cities, our industry, our transport, and our political boundaries are all based on an Earth not dynamically changing due to climate change. The apolitical Swiss Re Institute forecasts that our global economy will decline by $23 trillion – or 10% of total economic value – if 2050 net-zero emissions targets are not met.
Pro-Tip: Now is the Time for Competency
In the context of accelerating climate change, industry leaders were convened by Pearse Partners in March in London to discuss the competency required for institutions to act profitably, clearly, directly, and within their fiduciary duties to their stakeholders and society to address our pending green repricing tsunami.
“I saw there was a genuine gap for thought leadership within the space, particularly within the areas of ESG data Integration and Impact, and wanted to create something that would engage leaders across the industry together. Feedback from the event has been really positive and we’re proud to be pioneers of this type of event and looking forward to future events, where we can continually add value to clients, in ways which are important to them.” Katherine Howells, Senior Consultant, Pearse Partners
It is clearly given recent research that competency improves returns and mitigates risks for firms. Yet, what do we mean by competency?
Executive Competency: A New Approach
The executive competency required for institutions to address the climate crisis includes:
Integration: We need systems thinkers. Think of “jack of all trades”. We need people who can understand sustainable systems, and decode sustainable systems into plain speak for the rest of us. Climate risk is financial risk, and it impacts us all.
Integrity: We need individuals who can be honest about short-comings as no one institution and no one individual has ever managed the climate transition risk before, as, this is the first time that we as a society in our history have had to address climate transition risk.
Innovation: With innovation, we need less “new” and more “do”. The innovation required for climate risk transition is less about being the “genius” and much more about collaboration and working together each day to problem solve, making the complex simple.
Inclusion: We need a business model based on inclusion as opposed to exclusion. Climate risk impacts us all and if we exclude others we are losing out on potential key execution partners.
This was a great panel, which highlighted the innovation, inclusivity, integrity and integration needed to address the most pressing issue of our time. Rather than look at ESG metrics and impact investment through a siloed lens, what is needed is a systems-level approach. Companies willing to embrace these issues can tap successfully into the single biggest investment opportunity.
Companies like Responsible Alpha help businesses to understand and integrate their path to Net Zero better from a risk and data perspective. VC investors like Molten Ventures, pioneer exciting sustainability and climate-focused investments pivotal to the protection, restoration, and preservation of the environment.
The collaboration of both of these will accelerate the creation of a sustainable future.