\nwelcome to Grist Talks, our regular series of conversations with really smart
\npeople about really interesting topics. I’m Mary Bruno your really smart and interesting host. And I’m joined today by really smart and really
\ninteresting panelists. But before I bring them into the conversation, let me
\nfirst introduce today’s topic.<\/p>\n
<\/p>\n
On January 27th, commissioners at the U.S.
\nSecurities and Exchange Commission decided in a close 3-2 vote that publicly
\ntraded companies really ought to disclose any climate change-related risks and
\nopportunities that might affect their bottom line. So for example, do ski
\nresorts have a plan for dealing with warmer, dryer winters? Have insurance
\ncompanies calculated the budget impacts of more severe weather or a rise in sea
\nlevel? Has the healthcare industry prepared for an expansion of certain viruses
\nand bacteria? Inquiring, responsible investors needed to know, hence the SEC’s
\nvote, and I quote “to prove public companies with interpretive guidance on
\nexisting SEC disclosure requirements as the apply to business or legal
\ndevelopments relating to the issue of climate change.”<\/p>\n
<\/p>\n
So what does it all
\nmean? That’s why we’re here today.<\/p>\n
<\/p>\n
<\/a><\/p>\n <\/p>\n We’re going to be talking about impact <\/p>\n So with that, I am very pleased to welcome our three <\/p>\n Investor, Julie Gorte, Senior Vice President for Sustainable Investing <\/p>\n Economist, Kristen Sheeran, Executive <\/p>\n And futurist, Sara <\/p>\n It’s a great pleasure to <\/p>\n Investors have been pushing the SEC for some kind of leadership or <\/p>\n Julie<\/strong>: The most proximate answer to that <\/p>\n This was not the first time that the SEC had heard that <\/p>\n There was a <\/p>\n Now we’re seeing reports from all the mainstream analysts that provide research to everybody else <\/p>\n You mentioned health Mary<\/strong>: So no <\/p>\n Julie: <\/strong>Well, the <\/p>\n Mary<\/strong>: So, there has been this growing awareness on the part of the investment community that <\/p>\n Julie<\/strong>: Oh, no. <\/p>\n Mary:<\/strong> Kristen, do <\/p>\n Kristen: <\/strong>Sure. There’s this misperception amongst many that corporate America is <\/p>\n Mary<\/strong>: Clarity-it’s <\/p>\n Kristen:<\/strong> Clarity <\/p>\n Mary<\/strong>: Julie, let <\/p>\n Julie<\/strong>: That is <\/p>\n Mary:<\/strong> So, will it <\/p>\n Julie<\/strong>: They can [choose to ignore it], <\/p>\n The SEC has been Mary<\/strong>: Let me move <\/p>\n Kristen:<\/strong> Economists, in general, tend to be very apolitical. But economists, especially <\/p>\n Mary<\/strong>: Is there consensus about <\/p>\n Kristen<\/strong>: It’s <\/p>\n Mary:<\/strong> Julie, how <\/p>\n Julie:<\/strong> One of the things that the financial market is not at all short on is <\/p>\n Mary<\/strong>: So it could <\/p>\n Julie<\/strong>: Yes.<\/p>\n <\/p>\n Mary<\/strong>: Kristen, when it comes to the SEC ruling and then, longer term, from <\/p>\n Kristen: <\/strong>There are two kinds of climate-related risks <\/p>\n The industries that are most vulnerable to the <\/p>\n At Mary<\/strong>: Sara, let <\/p>\n Sara<\/strong>: This [ruling] is part of a very important inflection point. After 20 years of talking and educating each other about <\/p>\n Mary: <\/strong>Kristen, <\/p>\n Kristen<\/strong>: Long-term environmental risks have largely been absent from the forefront of <\/p>\n We could, of course, also point to all sorts of other things that <\/p>\n Mary<\/strong>: Julie, what’s <\/p>\n Julie<\/strong>: It’s really embedded in our society. We have <\/p>\n Mary<\/strong>: Sara, let <\/p>\n Sara<\/strong>: First of <\/p>\n I think it’s going to come back to the fore. In <\/p>\n <\/p>\n Mary<\/strong>: Let me <\/p>\n Sara<\/strong>: They’re not <\/p>\n Mary<\/strong>: Kristen, <\/p>\n Kristen:<\/strong> Well, <\/p>\n When you think about what’s actually going to have to happen in the U.S. <\/p>\n Sara<\/strong>: And if I <\/p>\n Mary<\/strong>: Sara, when <\/p>\n Sara<\/strong>: We’d always been good at planning, but <\/p>\n The G.I. generation was amazing at <\/p>\n That was our parents and grandparents. It’s still in us. It’s still there in our culture. We’ve gotten away from it because we’ve been living <\/p>\n Buit we’re at a point now where Gallup is Mary: <\/strong>We only <\/p>\n Kristen<\/strong>: History books will look at this period of time <\/p>\n Mary<\/strong>: Julie?<\/p>\n <\/p>\n Julie<\/strong>: Fifty years from now, we’re either going to have 600 parts per million <\/p>\n Mary<\/strong>: Sarah, as the futurist I’ll give you the last word. The SEC’s ruling in January: big deal or tiny blip on the radar screen?<\/p>\n <\/p>\n Sarah<\/strong>: The SEC ruling is one piece of a larger shift that’s happening. As I said, it’s an inflection <\/p>\n Mary<\/strong>: And we’ll have to leave it <\/p>\n Related Links:<\/strong><\/p>\n Will an SEC ruling convert short-term greed into long-term sustainability? [UPDATED WITH TRANSCRIPT]<\/a><\/p>\n How Dirty Are We Willing to Get?<\/a><\/p>\n
\nof this “interpretive guidance” on day-to-day corporate practices and on the
\nU.S. economy in general. But we’ll also be looking at the impact of the SEC
\ndecision on climate change itself. Could it, for instance, mark a turning point
\nin the struggle to arrest climate change? Could these new SEC guidelines give
\ncorporate America, and maybe the rest of us too, a little nudge, maybe a shove,
\nto start thinking and planning for the long term? If so, it would be an
\nimmense, an important cultural shift. Because let’s face it, the ability to think ahead—way, way, way,
\nahead—is an obvious first step in tackling a problem as complex and
\nmulti-generational as climate change.<\/p>\n
\npanelists:<\/p>\n
\nat New Hampshire based Pax World Management Corporation, which, if you don’t
\nknow, was the first socially responsible investment firm in the U.S.; <\/p>\n
\nDirector of the Economics for Equity and the Environmental, or E3 Network, in
\nPortland, Ore., and co-author of the book, Saving Kyoto;<\/p>\n
\nRobinson, a fellow at both the Campaign for America’s Future and The
\nCommonwill Institute, which are located in Washington D.C. and San Francisco,
\nrespectively. <\/p>\n
\nhave you all with us today. Julie Gorte, let’s start with you. <\/p>\n
\ndirection on corporate disclosure of climate-related risks, for 10 years,
\nright? So why is this issue so important to investors? Why, if it is so
\nimportant to investors, has it taken so long to get some action? And while you’re
\nanswering those questions, can you also describe for us who and how the
\ninvestment community has been lobbying all this time?<\/p>\n
\nwho and how question is that there were 22 of us that petitioned the SEC
\nin September of 2007 to issue this guidance. And those petitioners included the treasurers, controllers, or financial officials
\nrepresenting California, Florida, Kentucky, Maine, Maryland, New Jersey, New
\nYork, North Carolina, Oregon, Rhode Island, and Vermont. There were also two
\nasset managers, including my firm Pax, and three nonprofits that joined in this
\npetition.<\/p>\n
\nwe wanted some more interpretive
\nguidance or action on climate change. We’d been saying so for quite some time.
\nThe Investor Network on Climate Risk, which includes all of the above mentioned
\nentities as well as many more asset managers and asset owners, was formed in
\n2001. Part of our platform right from the start was that we
\nneeded some public sector action, including guidance or action on the reporting of
\nclimate change risks and opportunities. If I go back a
\ndecade, there were very few
\nin the investment community that paid attention to it accept in the socially
\nresponsible investment world. In the years since 2001, the investment community has become much more interested in and aware of climate change.<\/p>\n
\nreport in the early 2000s from the Association of British Insurers noting that
\nthe damages, or losses—insured losses—from severe weather had doubled and
\ntripled over the previous two-to-three year period, and that they were expected
\nto continue to rise on a rather dramatic scale as a result of climate
\nchange. So when the insurers get concerned, because that absolutely is their bottom line, a lot of other investors started
\npaying attention.<\/p>\n
\nin the financial community—you know, Citigroup, Goldman Sachs, HSBC, Societe
\nGeneral—covering climate
\nchange, originally just with respect to the big emitters like utilities and
\nenergy companies, but then sort of branching out and saying “well, here’s how
\nit could effect this sector or that sector.” And pretty soon it got to the
\npoint where we recognized that there are no sectors, really, that don’t have to think about climate change.<\/p>\n
\ncare companies and the expanding landscape of morbidity and mortality. You’ve got Bell South with I don’t know how many thousands of
\nwires strung all over the hurricane alley down in the South. So, what we’re
\nreally seeing in investment is that the consciousness of climate change as a
\nfinancial issue has increased, and is still increasing, and I think that was part
\nof the critical mass that led to the SEC issuing this guideline.<\/p>\n
\nsector left behind-I like that. Publicly-traded companies are already required to report anything considered “material”
\nto their investors. So, why did
\nit take so long? Why was it so difficult to convince the SEC on climate-change
\nrelated risks and benefits? Were there certain stumbling blocks? And what or
\nwho finally made the SEC take action?<\/p>\n
\nSEC is kind of like a super-tanker: it doesn’t turn on a dime, and it probably
\nshouldn’t. I think it does wait for issues to reach the level of concern or
\nconsciousness among a significant number of financial institutions before it acts.
\nAnd that’s true of a lot of public policy. There was also an election, if you remember, a couple years ago that changed
\nthe makeup of all the executive [branch of government], including the SEC. So, we did have sort of a political
\nchange in America, as well as a rising tide of investor concern and sentiment
\nregarding the materiality of climate change.<\/p>\n
\nclimate change was an issue that was material to the success
\nof the businesses they were thinking of investing in. Has that awareness
\nand urgency, before the SEC ruling at least, spilled out at all into the
\ncorporate community? Or is it just investors that are on board with this?<\/p>\n
\n[Awareness and urgency] has been growing in the corporate community as well. The financial
\ncommunity is just kind of a mirror of the rest of society in many ways. So, if go back, for example, to 1997 to the third conference of the parties
\nin Kyoto that resulted in the Kyoto Protocol, you could probably have used one
\nhand to count the number of companies that actually reported anything with
\nrespect to climate change publicly. That would have included B.P. and Shell and a couple of other leaders, not
\ntoo many. Since then, we’ve seen the insurance and reinsurance industries
\nreally start to run the bases on this issue, partly
\nbecause they have to; they have long-term liability with respect to storms and fires
\nand floods and droughts. A lot of the companies that were
\nbig emitters were aware, even back in 2000, that at
\nsome point, and certainly in 2005 when the Kyoto Protocol entered into force, [that they’d have to take account of climate change]. The awareness among U.S.
\ncompanies was, “well, we may not have a law right now but there probably will
\nbe one someday and we should probably get ready to see what our liabilities
\nare.”<\/p>\n
\nyou have anything to add to that?<\/p>\n
\nopposed to actions that would deal with the climate change problem head on, and
\nit’s simply just not the case. With the exception of the fossil-fuel industry
\nand a few others who have very vocally opposed any pro-active measures in the
\nU.S. to deal with climate change threats, most of corporate America realizes
\nthat the greatest risks of climate change come from its physical impact rather than
\nfrom regulations per se. Whether you’re talking about big companies like
\nMicrosoft, Nike, Coca-Cola, Starbucks, these are just a few examples of
\nbusinesses that have come out and openly supported immediate and aggressive
\nactions to prevent climate change and have lobbied Congress in that regard.
\nWhat business hates most is uncertainty. Business in America has been
\nasking our elected leaders for clear and consistent rules, and clear and
\nconsistent pricing over carbon so they can plan ahead effectively.<\/p>\n
\nwhat we all need right?<\/p>\n
\nand certainty.<\/p>\n
\nme get back to you for a couple of quick questions. So the SEC action isn’t a
\nlaw, right?<\/p>\n
\ncorrect.<\/p>\n
\nbe enforced? How does it get enforced? Can companies just choose to ignore it
\nif they want to?<\/p>\n
\nyes. The law says that companies must report material actions to their
\ninvestors. You ask any corporate lawyer what materiality means and
\nthey’ll say, “well, I can give you a long definition, but the short one is
\nnailing jelly to a wall.” There’s always some doubt as to what materiality is,
\nor what an investor would consider material, and the SEC has always resisted
\nsetting a numeric threshold: it’s not 5% of your earnings or your assets or
\nsomething, although that’s often used as a rule of thumb.<\/p>\n
\nissuing guidance on the reporting of environmental liability for over thirty
\nyears now, so they’ve done this before. You know, if you have big Superfund
\ncleanup liabilities, or asbestos liabilities, or something like that, you’re expected to
\nsay so to your investors. So what this SEC guidance does, is basically signals that the SEC sees climate change as something that could
\nhave a material impact on a sufficiently large number of publicly-traded
\ncompanies that it’s worth considering in its own right. How would it be enforced? It would be
\nenforced pretty much after the fact. If, for example, we had a coal company
\nthat decided that climate change wasn’t material, and then we got a law that
\nsignificantly limited emissions and established a carbon-trading regime and the
\nstocks of the coal company fell 25%, that company’s investors could come back and lodge
\na securities fraud lawsuit and say ‘you should have told us about this and you
\ndidn’t.’<\/p>\n
\nto you Kristen. Were economists also out there lobbying or arguing for some
\nsort of regulatory change? Do economists lobby?<\/p>\n
\nthose involved in the E3 network, have become increasingly vocal in warning
\nthat the economic damages from climate change will be significant, and that
\nimmediate and significant investments in things like reductions in energy
\nefficiency and renewables will make good economic sense, especially when you
\ncompare those actions to the potential costs of inaction. There’s something that Julie
\njust said that I really want to underscore. This ruling really demonstrates
\nthat the SEC, and the private sector more generally perhaps, is a lot further
\nahead than our own government at this point in really coming to terms
\nwith both the risks and opportunities present in the climate crisis. From
\nan economics perspective, getting businesses to recognize and systematically
\naccount for the implications of climate change is important. But what
\neconomists more generally are lobbying for is a more broad-based and consistent policy
\nframework that could help provide the right incentives to these businesses to
\nmake those changes.<\/p>\n
\nwhat impact the SEC ruling will actually have on day-to-day corporate business
\npractices and operations? Is it just going to mean longer annual reports? What’s
\ngoing to happen?<\/p>\n
\nhard to say what impact this specific ruling will have. But I think it’s safe
\nto say that there’s no doubt that climate change, and the realities of
\ngrappling with climate change, are going to change business as usual in
\nAmerica. Planning for climate change, by definition, means planning for the
\nlong term. It means having different attitudes and practices with regards to
\nrisk and the environment. One thing we’ll see coming out of this is that firms
\nwill no longer be able to relegate the environment to an afterthought.
\nSustainability, it’s clear, is no longer about marketing green products to your
\nhigh-end consumer, or making sure that your workplace is more
\nresource-efficient, or being civic-minded; it’s about being smart and strategic
\nover the long-term. What we’re starting to see with this SEC decision is
\nthe elevating of long-term environmental concerns to the same realm as things like
\nlabor and capital to decision-making. This shift has been a long time in the
\nmaking because long-term environmental concerns have been relegated to the back
\nburner for quite some time.<\/p>\n
\ndo think this SEC action is going to affect investment decisions at Pax’s World
\nand other, maybe, more or less “enlightened” firms? And do you want to
\nspeculate quickly about what impact you think it might have on the corporate
\ncommunity and the economy in general.<\/p>\n
\nego. There are a lot of people in finance who are basically born on third base
\nand go through life thinking they hit a triple. And if they don’t know
\nsomething, it is, by definition, not important. And what they know is what
\ncompanies report to them. If you give them information on a lot of companies, they will find a way to do really interesting things with it. What this will do is increase the trend of raised awareness toward climate
\nchange. Once that awareness is raised, investors start to act on that
\ninformation. They say, ‘if you’re in this sector and aren’t aware of climate change, we
\ndon’t think you’re a terribly well-managed company.’ So you’re a little less
\nwilling to pay more for their earnings. The great secret about financial
\nmarkets is that, in some sense they [create] a self-fulfilling prophesy. If we all, as
\ninvestors, think that companies that are environmentally well-managed are going to perform better, we’ll pay more for them
\nand they will trade at a premium. They will be worth more
\nbecause of their environmental management. It’ll take a while. But giving people this information,
\ngiving them another way to distinguish well-managed companies from the hoi
\npolloi is going to lead to that outcome. <\/p>\n
\nunleash a cascade of sustainability.<\/p>\n
\nclimate change itself, some businesses are going to be winners and some are
\ngoing to be losers, right? The impact, of course, will vary based on the
\ntype and the size of the business in question. But given that, can you predict who the winners and losers will be, both short- and
\nlong-term?<\/p>\n
\nthat this SEC ruling is basically taking into account. On the one hand there’s
\nthe risks that stem from the physical impacts of climate change. And on the
\nother hand, there are the risks that are embodied in the impacts of regulating
\ncarbon and how that [regulation] is going to affect a firm’s operating costs and its
\ncompetitiveness.<\/p>\n
\nphysical impacts of climate change, we’ve talked about some of them already, include industries like agriculture, forestry and paper products, tourism,
\nreal state, offshore energy development, and, of course, insurance. But
\ncompanies that use fossil fuels intensely in their production, like the
\nelectric utilities that invest in high-emission power plants, or companies that
\nproduce carbon-intensive products, like car companies that continue to produce
\ngas-guzzling SUVs rather than more efficient hybrids or diesel engines
\nare also examples of companies that are going to find themselves at a competitive
\ndisadvantage in the future because of regulations on carbon and the resulting
\ndecrease in demand for carbon-intensive technologies and products.<\/p>\n
\nthe same time, companies that demonstrate that they can meet this new demand
\nfor low-emissions technology are gong to be at a competitive advantage.
\nAnd these are the companies I think we’ll see emerge as winners in the new green
\neconomy. One of the
\nmost beneficial things that might come out of this ruling is that it’s going to
\nhelp people begin to envision exactly which companies will or will not succeed
\nin a carbon-constrained world over the next 25-to-50 years. We talk
\nto people about how business-as-usual has to change, about how the economic
\nsystem has to be transformed in order to really meet the climate challenge. You
\nrun up against the limits of people’s imaginations and their ability to think long-term about what that would look like? ‘What
\nkind of car am I going to be driving?’ ‘Where am I going to live?’ ‘What kind of
\nindustries are my kids going to be working in?’ This is the first step in
\nsystematically beginning to identify that these are the industries that are
\npoised to advance and these are the industries that are going to struggle in a
\ncarbon-constrained world.<\/p>\n
\nme loop you into the conversation here. We’ve been talking, thus far, about
\nthe impact of this one, specific SEC decision’s effects on corporations and
\ninvestors and the economy in general.
\nBut as a futurist, what is it going to mean to the rest of us? For the regular people, like the college student who’s pulling
\ncoffee at Starbucks, or the single mom who’s stocking shelves at Wal-Mart, or the unemployed auto worker, public school teacher—you name
\nit. Is my life, or my habits, or my community going to change at all in the
\nnext year, or 10 years, or 20 years? Can you look into the crystal
\nball and tell us how?<\/p>\n
\nclimate change, we’re finally reaching the point where the doing is happening. Julie talked about turning supertankers. Changing our minds,
\nchanging our attitudes, our beliefs about things is comparatively low-cost
\ncompared to changing the entire financial and physical infrastructure of our
\nsociety, which is really what this is about. And so we’re at that point. When
\nthe SEC makes guidances like this, it helps change the entire way money flows.
\nAnd that in turn will change the structures we live by. So, yes, within five
\nyears I think investments will be flowing differently. Governments and
\nbusinesses will be making big decisions, high-stakes decisions that they
\nhaven’t been willing to make on this kind of scale until this point. This does open the door. Changes will begin to happen more quickly because these [corporate] institutions
\nare big; they control a lot of our resources. Individuals residences are only about 15% of the carbon problem; business is 85%. When
\nbusiness begins to change, that’s when the problem begins to get solved. I’m
\nvery excited about the prospects here.<\/p>\n
\nyou pointed at one point, earlier in the conversation, that an accounting for environmental risks has been largely absent from long-term corporate planning. But isn’t long-term planning central to corporate
\nsuccess? Does corporate America just not take climate change seriously? Have
\nthe captains of industries just been sticking their heads in the sand on this
\none? Or is corporate culture just not really designed at the moment to think
\nmore than two or three quarters out?<\/p>\n
\nbusiness priorities and decision-making, and they’ve been absent, largely, from
\neconomics that then models those business decisions. In part, it’s
\nbecause all of us have had this default assumption,
\nwhether we made it explicit or not, that we didn’t have to worry about
\nlong-term environmental problems because between technological change and
\neconomic growth would be able to negate
\nmost, if not all, negative environmental feedbacks. And here we are talking
\nabout an environmental crisis where the impacts are largely irreversible, at
\nleast within a human time frame. It forces us to realize that we can’t wait for
\ntechnology to save us; we can’t just assume that being richer in the future
\nwill insulate us from these feedbacks. We need to take proactive actions in the
\npresent.<\/p>\n
\nencourage institutional short-term decision-making. The current system of pay and rewards for corporate leaders, for example.
\nWhen a CEO’s pay depends largely upon stock options and dividends, it’s no
\nsurprise that she’s going to make decisions based on short-term profitability
\nrather than long-term considerations. The SEC ruling really won’t change that, but at
\nleast it’s going to give investors the information they need to determine which
\nfirms are going to remain profitable over the long-term.<\/p>\n
\nyour view on that? On that kind of short-term thinking that has come to
\ndominate Wall Street, and American businesses, and certain investors, probably,
\nfor at least the last couple of decades? Why do you think it’s become so
\nentrenched?<\/p>\n
\nfast food, continuous polling in Congress. It’s all stuff
\nthat tends to focus you on the right here, right now. What I call the wolf at
\nthe door problem. If the most important thing in your life right now is that you
\ndon’t have a job, you’re not going to be very worried about climate change. Climate
\ntends to be more of the termite in the basement problem. Termites will eat your house just as surely as the wolf will blow it down. But
\nyou can’t wait until the termites have eaten the parlor floor until you act,
\nbecause by then it’s too late. We have greenhouse gases that persist in
\nthe atmosphere for up to a century in many cases. It’s
\nsomething we have to start on now and get the payoff later. That is not
\nterribly in step with our current society.<\/p>\n
\nme get back to you. When I think about our ability to think long-term as a
\nspecies, the Mayans built these huge temples, the Egyptians built pyramids, the
\nEuropeans built cathedrals. All projects that took generations to
\ncomplete. The person who launched these projects—the pharoah, the archbishop—had to know that they certainly wouldn’t be alive to see their completion, nor
\nwould their grandchildren, or their great-grandchildren. So
\nhumans obviously possess the capacity for very long-term thinking. Are
\nthere more contemporary examples of long-term planning that you could provide that would give us some hope in that regard? Or has that ability to plan for the long term somehow atrophied? If it has atrophied, why did it happen and how can we get it back?<\/p>\n
\nall, Americans are world-class planners; we are in league with those [temple, pyramid, cathedral] people. We
\ntend to do it on a very fast basis. We’re acute responders. We do it in the
\nE.R. What we don’t do in the long-range, we can do a lot, and very quickly, in the
\nshort-range. We know how to organize and prioritize in a way that nobody in the
\nworld has been able to do. We proved this in World War II: we were arming the
\nworld and fighting a two-front war and we had these logistical tools. We had
\nthis magical ability to plan that on a scale that nobody else really
\ncould. It’s a gift that we have and we
\ntake it very much for granted.<\/p>\n
\nterms of longer-term thinking, the societies that you described were all monarchies
\nof one kind of another and in a democracy it’s harder to hold a vision for the
\nlonger term. You need to assign the role of vision holding to the institutions
\nof your societies rather than to an individual like a king or a series of
\nkings. The way you do that is you embed it in your educational system and in
\nyour religion. There are institutions that are foundational, that carry forward
\nour values and priorities from generation to generation. And as long as these institutions keep teaching
\nnew generations you can hold the vision. Our education system, our
\nmedia, and to a very large extent our religious institutions, have a big role
\nto play here in holding that vision for as long as it’s going to take, which is
\nthe rest of this century. <\/p>\n
\nstick with this topic for a second. On the question of how does broad cultural
\nchange usually happen, Sara, who and what are the reliable agents for this kind
\nof change? You mentioned religious and educational institutions. Is it ever business? In this SEC instance, could the corporate
\ncommunity actually be a leader in this cultural shift toward a more strategic
\nlong-term approach?<\/p>\n
\na leader, but they’re an important follower. Change usually happens on a lot of
\nlevels at once, but it always starts with a fundamental shift in our assumptions
\nand our visions about how the world should work. So the first thing, you have
\nto change the world, change the story. Most of us are aware that our
\nfoundational assumptions about economics don’t work anymore, and
\nwe’re actively looking for new paradigms. So, for the last 20 years, our documented
\nstorytellers in religion, media and education, have been telling us that we
\nneed to change our views around this, meaning our priorities around climate
\nchange. And this is why 70% of us now get it; most of us are on board. But
\nthat’s the talking stage; doing is harder, and doing only really happens when
\nyou get business and government involved in actively taking these new values
\nand basing their decisionmaking process on them. I think that’s what we’re
\nseeing now. It’is that inflection point where business and government begin to get
\non the side of change and that’s when we really start to see those changes
\ntaking place on the ground.<\/p>\n
\nlet’s say that in the wake of this SEC ruling, American corporations stand up
\nand embrace climate-change related planning in a big way. What can we expect
\nthe U.S. to look like in say, 30 or 50 years? What businesses will
\ndominate? Which will decline or disappear? Can you read the tea leaves a little
\non that?<\/p>\n
\nit’s hard to say for sure. One of the challenges all along in thinking about
\nthe post-fossil fuel economy is that fossil fuels provided such a quick and
\neasy and cheap energy source and there’s likely not going to be a single silver
\nbullet that comes along and replaces that. So we’re going to have an energy
\nsystem based on massive advances in energy-efficiency, as well as
\ndifferent renewables—geothermal, solar, wind, etc. So
\nwe’re likely to see a mixed of different energy sources and we may see a more
\ndecentralized, more community-based energy production.<\/p>\n
\neconomy, say by the year 2050, to really get us on track for making a dent in
\nthe climate problem, for doing what the scientists say we have to do to
\nminimize the worst risks from climate change, we’re looking at some pretty
\nsignificant transformations. By 2050, we need a minimum of 80% reduction in our
\ngreenhouse gasses, and to achieve that we’re either going to have to convert
\nmost of our energy system over to a mix of different renewables, or make some
\nreally quick advances in carbon capture and storage by the midpoint of the next
\ncentury. We’re going to be investing in reforestation and prevention of deforestation.
\nOur companies are going to have to take a leadership role in both developing
\nthe new technologies, but then also exporting and sharing the technologies for
\nrenewable energy production with the developing world. These are huge changes
\nthat have to take place in a relatively short period of time. But the good news
\non the climate front is that it’s economically and technically
\npossible. What we really need is the political will and the public will to do
\nit at this point.<\/p>\n
\ncould add something here, one of the great things here about this ruling is
\nthat it should, in the long-run, make our businesses stronger and more
\ninnovative. Whenever we step outside of our usual assumptions to look for new
\nrisks and threats, we also very often notice the new opportunities that we
\nwould have never seen if we hadn’t been pushed out there. So by forcing
\nbusinesses to get real about their risk exposure, we’re also pushing them to where they’ll be able to see and position themselves for new opportunities
\nas well. So this is a competitiveness issue and investors hopefully reward
\nthat.<\/p>\n
\nyou talked before about how we’ve done this before when America geared up for World
\nWar II, for instance, with phenomenal results. Did that experience in World War II translate into
\na planning culture, post-World War II? And again, how did we lose that ability?<\/p>\n
\nWorld War II forced us to get good, fast. And what you found was, throughout
\nthe military, from the highest general down to the supply clerk, everybody had
\nto learn to think strategically, three-steps ahead. ‘What am I gong to need
\ndown the road?’ All of America went through this process, and when the boys
\ncame home, these same skills got applied into creating post-war America. You
\nsaw this in the way wives ran their households, and in the way bureaucrats ran city
\ngovernments. Suddenly, you had these planning departments, at the county
\nlevel mostly, that were planning out 10, 20 years. What schools are we
\ngoing to need? Where are we going to get our water? What kind of roads are we
\ngoing to need? People were thinking ahead.<\/p>\n
\nthat. It’s what enabled them to put a man on the moon. Just sticking it out there, as
\nJFK did in 1960, and saying ‘we’re going to do this in ten years,’ with
\ntechnologies that didn’t even exist at the time. He said, ‘we’re going to put a marker out
\nand in 10 years we’re going to do this.’ And there was a tremendous confidence
\nin their own ability to hit that mark.<\/p>\n
\noff the fat of the prosperity that all that planning created. So we’ve had a wide
\nmargin for error. If we get something wrong, it’s not that big a deal; the
\nconsequences aren’t that severe.<\/p>\n
\ntelling us the number one concern of American families is paying off debt and
\nsaving for the future. Families are starting to hunker down and come back
\ntogether and get serious because we don’t have that margin for error anymore.
\nThe consequences for failure are high and getting higher. We have proven in
\nthe past that we can focus wonderfully well under those circumstances, and I
\nhave faith that we can do it again.<\/p>\n
\nhave a few minutes left, so I’d quickly like to hear from all of you on this
\nlast question. When
\nhistorians look back, in, let’s say, 50 years on how significant this January
\nSEC ruling is in terms of addressing climate change and sustainability, are
\nthey going to say it was “no big deal” or that as Sarah pointed out,
\nit was “an inflection point?” Kristen?<\/p>\n
\nin our history as one of momentous social change. And with most social change,
\nwhen you’re in the middle of it, it’s sometimes hard to see how much of it is
\nactually going on around you. But I think when we look back 50 years from now
\nwe’ll see this as the period of time when we finally
\nrighted the ship.<\/p>\n
\ncarbon in the atmosphere or we’re going to have 300 ppm or so. If we’re in the
\nlatter condition, that is, if we do manage to curtail our emissions and curb this
\nproblem, then yes, I do think we’ll look back on [the SEC ruling] as one of the things that
\ncaused the inflection point. This was the decade during which investors,
\ngovernments, citizens really started getting it, and really started
\nchanging their behavior as a result. If [that doesn;t occur], then we’re going to look back
\non this period of time and say “oh shit”—or add the epithet of your choice—we should have
\nseen it coming, we should have done something, this wasn’t enough.”<\/p>\n
\npoint where we’re moving from talking to doing, and the doing is starting to
\nhappen very quickly. I think over the next 10-20 years, as the money flow
\nshifts, and the way we think about it really begins to shift in terms of policy
\nand the larger decisions we make as a culture, we’re going to be
\nsurprised at how much progress finally gets made. It seems so slow until now. But we’re really hitting that point. It’s really going to move.
\nAnd Julie is absolutely right. Looking back 50 years there are really only
\ntwo scenarios: one is that we responded correctly and got it right. The other is that we didn’t
\nand the results will be really quite awful.<\/p>\n
\nat that. Thank you to our panelists: Julie Gorte, Kristen Sheeran, and Sara
\nRobinson. Thanks also to our listeners for tuning in. This program was produced in conjunction with The Climate Desk<\/a>, a journalistic collaboration dedicated to exploring the impact of a changing climate.<\/p>\n