Invest for Good: Climate change and ethics
- The four flags that suggest companies need to be more ethical are the anti-establishment populism flag that has gained momentum as a result of our increased interconnectedness; the green flag focusing on the impacts of climate change; the pandemic flag and the work has changed flag, which focuses on the need to support and encourage an entrepreneurial revolution
- South Africa’s private sector will have to play a role in rolling out Covid vaccines
- 50%-60% of the world’s energy should be derived from renewable sources by 2050
Clem Sunter, South Africa’s most highly regarded scenario planner and strategist, discusses climate change and ethics and the Covid vaccine roll-out and what that may mean morally and ethically from a global perspective.
What is scenario planning?
Scenario planners look at multiple possible futures and watch the flags to see which future is coming into play and importantly adapt their strategy to that particular flag and scenario. It’s very important for companies to have an ethical compass, which guides them on what is acceptable and what is not. It’s not about writing the scenario, but about living it. Four flags are going up at the moment, which suggest that companies must become more ethical.
Anti-establishment populism flag
This flag has really gone up in the last 10 years because of social media and the internet. We’ve seen movements, such as Black Lives Matter, being started and spread around the world in 24 hours. This interconnectedness means that the anti-establishment populist flag is waving high. It produced Trump who used the internet and Twitter to assemble enough votes to become president. It also accounted for Brexit where the north of England voted against the establishment and are now paying for it as trade between the UK and Europe is now more difficult. Real emotion led people to vote for Brexit and now Scotland may be trying to do the same to become independent from Britain. The biggest thing about this flag is the level of inequality in the world, not only within countries between the rich, middle class and poor, but between countries. Ever since the Global Financial Crisis in 2008, the super rich got back to being super rich quickly and during the pandemic it’s the billionaires who become richer because they are usually involved with internet companies that have done well out of lockdowns. The middle class and poor have done badly. Since 2008, we’ve had a relatively flat global economy and the pandemic has impacted small businesses. Wall Street may be back to pre-Covid levels, but for small businesses it’s been a catastrophe and this is continuing.
Environmental or green flag
The best climate experts in the world say there is a 95% probability that all the theories around climate change are correct, yet there are still people who challenge the validity of this flag. South Australia credits climate change as the cause of the lower volumes of water flowing from Queensland to Adelaide in summer. They are now looking at smarter water management techniques and have set up a special department at the university to tackle the problem. The problem for governments and business is that this is a long-term journey and to construct a green path may cost a lot of money. It will cost money to save the planet and there is no Planet B, so companies will have to consider helping communities to resolve this particular flag as one of the key aspects of a future strategy.
The pandemic has created real uncertainty in the world. In April, I created four scenarios. The first was much ado about nothing, the narrative of which was that this was just the ‘flu, which has since been proved totally invalid. The second was camel’s straw where the pandemic goes through waves and mutates, creating a straw that breaks the camel’s back, i.e. the economy. This is exactly where we are now. People did not think this pandemic would go on for so long. The markets still feel that by June the global economy will be back to normal, which is why the markets are currently at pre-Covid levels. The real economy on the ground is very different with a lot of small businesses and industries that have really suffered. People are not tuned to the idea that this pandemic can go on. The camels’ straw scenario is still very much in play. The third scenario was Spain again where the virus mutates to a more lethal form as with the second phase of Spanish flu that killed 50-100 million people. We’re nowhere near that figure, but we must watch the variants to see whether they are becoming more lethal. We cannot discount the pandemic getting worse and lasting longer than people think. The fourth scenario was tightrope, where governments around the world walk the tightrope between lives and livelihoods. They don’t want to aggravate the pandemic, but equally don’t want to fall into the camel’s straw of an economic collapse. The biggest change is that it does look like it will go on for longer. Israel is a key sub-flag as they have led the world in terms of vaccinations, yet daily new cases are still very high. The jury is out on the effectiveness of the vaccines, but equally the distribution of the vaccines has thrown up an inconvenient truth about the world. First world countries are essentially monopolizing the vaccine supply for their own people while the rest of the world is being shut out and will continue to have a pandemic. As a business, how can we produce some ideas to rectify this unjust situation in the countries where we operate, with South Africa being one of those places?
Work has changed flag
This flag is highly relevant to ethical, sustainable business. In the last century, it was fairly easy to get a job in big business. With AI, hundreds and thousands of jobs in big business have been destroyed. Most young people today have to set up or start a small business with friends and this is how work has changed. An incredibly important ethical consideration is how business can help a new entrepreneurial revolution. I feel that in South Africa we should dedicate 20% of every supply chain of a big business to nurturing entrepreneurs and small business.
There are so many good things that companies can do to overcome the real hardship that is being caused by the pandemic, but equally the idea that we have to do something about the green flag and create a cleaner economy as we recover.
Will Covid be a catalyst for change?
There will be some much longer-term implications associated with the pandemic and companies must study the implications for their business and staff. Work from home or a hybrid version will become more prevalent. Outside those countries where the vaccine is being handled by the government, there will be a lot of private sector initiatives to get vaccine programmes going. We are in a state of paralysis and the private sector in South Africa will have to play a major role in rolling out the vaccine.
Does SA have the political will to change its energy production?
A lot of work has been done on alternative energy in South Africa with solar and wind farms. I want to see an environment that is more encouraging of alternative energy producers. You can’t eliminate coal burning stations completely, but we can start a programme of transformation. There are many very good alternatives coming out and the cost per unit of their electricity is reducing. The biggest change on the green flag is that whereas about 10-15 years ago, I thought this would create major changes later in the century, these changes are already happening. The ice sheets in the Antarctic, Greenland and the North Pole are melting. We are substantially transforming the world and creating climate change refugees. We need to build up a substantial ratio of renewable energy to overall energy, which should be up to 50-60% by the middle of the century.