Why Incumbents Fail – And What that Means for Sustainability

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The core assumption and focus of people who work to drive sustainability through markets – as corporate leaders, investors, NGOs or thought leaders – is that we need to convince existing companies and their shareholders that sustainability is first good for their business, and secondly, they can successfully transition to a sustainable business model.

But what if both of these are wrong? As someone who has spent over 25 years in that world, I’m starting to think they both might be. If so, it calls into question the very basis of the work literally millions of us are engaged in. So, it is at least worth a discussion!

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Disruptive Markets – What Sustainability Really Means for Business

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Many look around at today’s crises – climate change spinning out of control, inequality driving political instability and our oceans filling with plastic – and despair at the prospects for serious change. Most then try to apportion blame or at least seek to understand why. Business blames consumers. NGOs blame business. Everyone blames politicians.

Almost everyone who is engaged and thoughtful on this, even inside companies, at some level blame capitalism, markets and big business. This is well justified given, after all, it has been the delivery vehicle for all these crises.

But where does that leave us? As a campaigner who has spent 40+ years on these issues, I’m not satisfied with just a problem diagnosis, I need a way forward, a credible path to success. When talking about risks to the future of civilisation, accepting failure is not really a strategic option.

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The Walking Dead in Washington

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We’re all focused on the drama and entertainment of Trump’s takeover of the world’s centre of military, security and economic power. For some it’s exciting and entertaining, for others terrifying and apocalyptic. I too have been glued to the news – at various times having each of those responses! But now I’ve come back to earth, recognising it all for what it is. Important, but a sideshow to a much bigger and more important game. And on reflection, I’m glad he got elected.

How can a Trump Presidency be positive? Surely this is a major setback – to action on climate change, to addressing inequality, to human rights and global security. Doesn’t it make the world a scarier and less stable place?  In isolation, all true, but in context, not so much. The context is the key.

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Fossil Fuels are Finished. The Rest is Detail.

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It’s time to make the call – fossil fuels are finished. The rest is detail.

The detail is interesting and important, as I expand on below. But unless we recognise the central proposition: that the fossil fuel age is coming to an end, and within 15 to 30 years – not 50 to 100 – we risk making serious and damaging mistakes in climate and economic policy, in investment strategy and in geopolitics and defence.

I’ve written previously about 2015 being the year the “Dam of Denial” breaks, referring to the end of denial that climate change requires urgent, transformational economic change. While related, this is different. It is now becoming clear we’ve reached a tipping point where fossil fuels will enter terminal decline, independently of climate policy action.

Given climate policy action is also now accelerating, fossil fuels are double dead. To paraphrase Douglas Adams, “So long and thanks for all the energy”. Continue reading

The Year the Dam of Denial Breaks – Ready for the Flood?

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This is the year the “dam of denial” will break and the momentum for climate action will become an unstoppable flood. It will be messy, confusing and endlessly debated but with historical hindsight, 2015 will be the year. The year the world turned, primarily because the market woke up to the economic threat posed by climate change and the economic opportunity in the inevitable decline of fossil fuels. That shift will in turn unlock government policy and public opinion because the previous resistance to action argued on economic grounds, will reverse to favour action on economic grounds.

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The Global Energy Market’s Moment of Truth

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If you want to know what addressing climate change will really be like for business and investors, then take a look at today’s electricity and energy markets. Driven by climate policy, technology development, business innovation, NGO campaigns and investment risk analysis, creative destruction is inflicting itself upon the sector with a vengeance – and the process has just begun.

Value is being destroyed at an incredible scale with just one example being European utilities losing $750 billion in market cap in recent years. Another is the huge losses in value for coal companies and the cancellation of a large number of new coal mining projects around the world as the forecast growth in China and India evaporates. As I argued in my last Chronicle, Carbon Crash Solar Dawn, this is not a temporary market blip but a fundamental shift. Company strategies and business models that have been working for generations are collapsing. In parallel we see the creative side of the process, with new industries being built, entrepreneurs flourishing and massive wealth being created. Now the market is working, as it should, allocating capital to the places where risk and return are best aligned. It is at once a beautiful and brutal process to observe. Continue reading

Carbon Crash Solar Dawn

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I think it’s time to call it. Renewables and associated storage, transport and digital technologies are so rapidly disrupting whole industries’ business models they are pushing the fossil fuel industry towards inevitable collapse.

Some of you will struggle with that statement. Most people accept the idea that fossil fuels are all powerful – that the industry controls governments and it will take many decades to force them out of our economy. Fortunately, the fossil fuel industry suffers the same delusion.

In fact, probably the main benefit of the US shale gas and oil “revolution” is that it’s keeping the fossil fuel industry and it’s cheer squad distracted while renewables, electric cars and associated technologies build the momentum needed to make their takeover unstoppable – even by the most powerful industry in the world.

How could they miss something so profound? One thing I’ve learnt from decades inside boardrooms, is that, by and large, oil, coal and gas companies live in an analytical bubble, deluded about their immortality and firm in their beliefs that “renewables are decades away from competing” and “we are so cheap and dominant the economy depends on us” and “change will come, but not on my watch”. Dream on boys. Continue reading