Directors are being urged to prioritise governing climate risk, which requires a rethink of an organisation's strategy, risk and future-proofing plans.
Understanding the six different mindsets, attitudes and beliefs on climate change can help directors better frame conversations in the boardroom.
Considering the weight of the scientific consensus that climate change is man-made and a serious threat, how is it that the issue has become so vexed? Researchers at Yale University’s Program on Climate Change Communication — researching people’s beliefs, attitudes, perceptions of risk, values, voting patterns, media consumption and behaviours — reveal some of the obstacles. The Global Warming’s Six Americas study, first conducted in 2009, groups the public into six segments in terms of their attitudes and views about action — alarmed, concerned, cautious, disengaged, doubtful and dismissive. In the decade since the initial research, the proportion of alarmed has doubled, those who are concerned has remained static and the cautious, doubtful and dismissive have shrunk.
Researchers at Charles Sturt University replicated the US survey for Australian respondents in 2013. They found the segments differed within the Australian population, with five groups, minus the disengaged.
Dr Rebecca Huntley, a social researcher and research director at Vox Populi Research is looking deeper into the research in How to Talk about Climate Change in a Way that Makes a Difference (released in June). She says the different mindsets are driven by many complex factors — political, social and cultural identity, values and world view, as well as level of education. “On top of that, there is a tendency for different genders and generations to respond to climate change differently,” says Huntley. “Science isn’t always the best starting point for a discussion about climate change, but it depends on your audience and the issue you are talking about.
“For leaders seeking to understand how attitudes to climate change impact their business, it’s worth digging beneath the top-line statistics around belief in climate change and support for government action to a more segmented, nuanced approach. Getting to that approach requires buy-in from your research and strategy teams as well as at the board level.
1.5 degrees celsius
Limiting global warming to 1.5°C is projected to lower the impacts on terrestrial, freshwater and coastal ecosystems.
“I am finding in my research that often people’s eyes glaze over when you start talking about the usual climate change script around emissions and C02 levels. But if you start with the science of the solutions, renewable energy for domestic use and export, they get excited. My broad approach to climate communication with audiences not already convinced about the need for urgent action is: ‘solutions first, not science first’.”
Huntley says while the facts of climate change and the need for rapid response merits urgency, the language of crisis and emergency can turn off some groups and make them more critical of attempts to address climate change. “Work out what language associated with climate change your customers and stakeholders don’t like and why,” she advises.
“Work out what they feel are the important actions and solutions. Does the language around crisis and urgency backfire?
“Start the conversation with what matters to them most — what are the connections between your business, their investment in you and climate change.”
Climate change: The midsets
- Alarmed — convinced of the causes, consequences and seriousness of the issue, believe they are well informed; already making changes in their own lives and support an aggressive national response.
- Concerned — convinced the globe is warming and it’s a serious problem, but have not engaged with the issue personally, including not always voting for political parties with strong climate policies.
- Cautious — believe it is a problem, although less certain it is happening than the alarmed or concerned. Don’t view it as a personal threat and don’t feel a sense of urgency to deal with it.
- Disengaged — haven’t thought much about the issue at all, don’t know much about it, and are the most likely to say that they could easily change their minds about global warming.
- Doubtful — evenly split among those who think global warming is happening, those who think it isn’t, and those who don’t know. Many believe if it is happening, it’s caused by natural changes in the environment, won’t harm people for decades, if at all, and that we are already doing enough to respond to the threat.
- Dismissive — majority believe warming is not happening, is not a threat to either people or non-human nature, and strongly believe it is not a problem warranting a national response. This group is very sure climate change is not happening, and are often actively involved as opponents of a national effort to reduce emissions.
The world of decarbonisation is full of acronyms and terminology, but there are ideas and terms it is important to understand, writes John O’Brien FAICD.
Greenhouse gas emissions are primarily from carbon dioxide produced during the combustion of fossil fuels for stationary and transport energy and from industrial processes such as steel and cement making. Methane emissions from gas operations, coalmines, landfill and agriculture also contribute.
These emissions are categorised as either “operational emissions” (scope 1 if emitted onsite at a facility; scope 2 for emissions from imported energy); or as “value chain emissions” (scope 3). These can come from products you buy or when your products are transported and used by others.
The Intergovernmental Panel on Climate Change (IPCC) Paris Climate Agreement is key to how many companies and governments are changing. The December 2015 agreement aims to keep “global temperature rise this century well below two degrees Celsius above pre-industrial levels”. Given the average global temperature rise is already around 1.1 degrees Celsius, we can expect increasingly stronger regulatory action on climate change during the next decade.
This change is rapid and the biggest risk for organisations is to be blindsided. However, there are significant opportunities for the innovative with a nascent demand for “green” carbon-neutral products across the economy and in export markets. In the resources sector, for instance, there is a growing market for green copper and green nickel for batteries and electric vehicles. Green steel demand is being discussed and some suppliers are offering green LNG products. Carbon-neutral transport solutions will be needed to deliver these carbon-neutral products. This quest for decarbonised supply chains will have a domino effect throughout the entire economy.
Initiating the Process
Directors should start from the risk perspective.
- Understand climate risk Under a range of future science-based scenarios, how could markets, revenues, profits and the asset values be impacted by physical and transition risks?
- Pathway options Consider a range of abatement pathways for your company and the potential costs, liabilities and opportunities that are inherent in each. The IPCC offers various scenarios for guidance.
- Targets An agreed pathway means the abatement challenge and financial impacts can be quantified, and short- and long-term emissions abatement targets established.
- Projects The practical work of developing least-cost abatement projects is then required so targets are achieved with the greatest competitive advantage.
- Governance Ensure governance structures are aligned to the risks and measurement, and assurance and disclosure processes established.
Directors need to understand, whatever industry they’re in, that climate risk has the potential to have a material impact on finances. This is obvious if you work in an emissions-intensive sector, but all sectors of the economy will be impacted over the next few years. It will be critical to understand how these risks could play out for your company and how they could best be mitigated. Significant strategic opportunities provide material upside for those that act. Decarbonisation will have financial impacts across the economy and only informed directors will be able to successfully navigate their companies through the risks and realise the opportunities.
John O’Brien FAICD is an energy transition and decarbonisation partner at Deloitte Australia and author of Visions 2100.
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