It was 1989. Margaret Thatcher, poster girl for conservative pro-business policy, urged the United Nations General Assembly to take remedial action on global warming. From that date at least, governments around the world should have been aware that here was an issue deserving policy attention.
Margaret Thatcher was a scientist.
Of course, a politician’s opinions on a technical matter do not automatically become orthodoxy, even if she is well informed. So the first authoritative milestone in official recognition of the risk of climate change was probably not her speech but the 1990 First Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), which observed that:
“The potentially serious consequences of climate change on the global environment give sufficient reasons to begin by adopting response strategies that can be justified immediately even in the face of significant uncertainties.”
Not exactly unambiguous, but a flashing amber light.
From that date, the board of every company directly exposed to a change in policy on carbon emissions should have anticipated that policy would soon change and could have been expected to take preventive action.
In due course all companies will be affected by the biophysical and policy trends that are now in train, but some will be unduly severely affected. Companies in the transport, energy, mining, water and agriculture sectors are particularly vulnerable — this article is written about you.
“The multinationals have to take the long view,” stated Thatcher. “There will be no profit or satisfaction for anyone if pollution continues to destroy our planet.”
The lights turned to red with IPCC 2 in 1995. In its careful language, delaying mitigatory measures “may leave a nation or the world poorly prepared to deal with adverse changes and may increase the possibility of irreversible or very costly consequences”.
IPCC has never been a purely scientific organisation. At its founding, conservative voices, from the United States especially, insisted that the organisation be composed of government representatives, as they would no doubt be more cognisant of commercial pressures than scientists. In vetting the “Policymakers’ Summaries” line by line, government representatives have moderated the crispness of the scientific consensus and have caused the reports to repeatedly err on the side of caution in preference to alarmism.
It is exasperating to now read conservative commentators panning the IPCC for being politically tainted. Of course it is, always was, but not in the direction that climate contrarians pretend. We have lost crucial years through prevarication, as global indicators are deteriorating more rapidly than under the IPCC’s worst scenario.
IPCC 5 in 2014 represented a consensus of more than 95% of climate experts that the planet is suffering serious climate change, with potentially catastrophic effects on business-as-usual for both developed and developing economies: “Warming of the climate system is unequivocal.”
At what stage should a prudent board of a particularly carbon-exposed company take precautionary action?
Suppose that a board is advised that it faces a 5% risk of an event that would have disastrous consequences for the company? A prudent board would not ignore this risk. Companies routinely insure against risks of fire, accident and theft that are less likely than 5%.
At 25%, a prudent board would set off alarm bells, restructure the vulnerable parts of its organisation and appoint an expert board committee charged with investigating the phenomenon and devising preventive strategies.
Now suppose that the risk of this company-shaking event is 95%. That is the “here-and-now” for carbon-exposed industries. After IPCC 2, let alone IPCC 5, a board in an exposed industry that failed to take remedial action consistent with scientists’ warnings could be held legally liable for destroying shareholder value.
In a hypothetical court of law in 2020, it won’t be sufficient for a board to claim that it relied on assertions from commentators like Andrew Bolt or business leaders like Maurice Newman that climate change was a beat-up by radical environmentalists determined to wreck capitalist economies. The court will quickly dismiss any defence that the board took its scientific advice from polemicists.
Further, it would be disingenuous for a board to claim that it was waiting for a signal from government, as it is largely pressure from the business sector that has delayed action from governments. However, even this excuse for inaction would evaporate on November 24, 2007, the date of the election of a national Labor government committed to placing a price on carbon emissions.
Companies deeply involved in burning fossil fuels such as in coal-fired power stations know well that they can expect suits on behalf of environmental groups alleging that they have wantonly damaged the public commons. Such suits however face the well-known difficulty of attributing general effects directly to a specific cause.
But promoters of a class action on behalf of shareholders in a company with stranded assets do not need to prove direct damage to the atmosphere from their firm’s operations; they need only show that the company negligently allowed its assets to be devalued. Ignorance would be no excuse given the voluminous factual and interpretative material that is available on the pivotal subjects.
Of course, not all scientists think the same way — geologists and chemical engineers tend to view ecological systems through lenses different from those of biologists. Simply appointing a token scientist from some other sub-discipline as a director will not by itself insulate a company from loss of its capital value or collapse of its business model.
Business does not need green radicals to trash shareholder value. The business spokespeople arguing to keep coal-fired power stations open and ignore the signals of environmental distress are doing a perfectly good job of wrecking their industries’ business models by themselves.
Sound reasoning Dr Edwards, however doesn’t business routinely see abuses of power without redress? IOW, CEOs, directors & management frequently destroy shareholder value out of greed, vanity & stupidity, and it is a pretty rare group of shareholders that begin never mind successfully conclude a class action to get compensation. Most shareholders just chalk their losses up to grim experience and hop on the next profitseeking opportunity. Then theres other stakeholders, -everybody- else in case of anthropogenic warming, who have got zero leverage against the selfserving corporate elites. I don’t want to discourage you from lobbying CEO etc, but i think you’re pushing string, taking their PR blather for reality.
Dr Geoff Edwards, President of the Royal Society of Queensland, has it occurred to you that the actions of businesses might be seen more as maximising profits rather than supporting the efforts of politically inspired activists who may have scientific credentials but have been unable to come up with an acceptable action programme which would result in meaningful, effective, legally binding enforceable International Agreements becoming a reality?
As a youngster in the 1940s I was familiar with causeS of Climate Change, and the fact that it wasn’t explained by simplistic notions about CO2 emissions. Perhaps since you believe political action is needed you might concentrate on working out how [apart from emotive appeals] we might convince International Governments re what you feel we need to do?
Thank you Liamj and Norman for taking the trouble to respond. Apologies for the delay in following up – I have been travelling, etc.
Liamj, I agree that the mindset of both business leaders and shareholders seems to be quite resistant to pessimistic information about the planet’s biophysical condition. At heart there is a shortfall in ethics; I don’t pretend that the solutions are legal ones. However, there are legal activists around who potentially could seek to exploit the vulnerability of carbon-intensive businesses, even if simply for their own profit. My point is that businesses which ignore the warning signals are commercially vulnerable, as the biophysical world changes and public opinion shifts.
Norman
You are correct, business sees its role as maximising profits. This is a mindset only as it is not written into corporations law. It can be changed. The corporate form is established by governments to enable firms to supply the community with goods and services.
I don’t think I or the scientific community are guilty of your charge of failing to come up with a feasible path to a better future. First, the scientific and environmental literature is replete with dialogue on the transition to a more sustainable setting – this has been an active subject in the popular and scholarly scientific journals ever since Limits to Growth was published – 1972, more than 40 years ago.
Second, it is the role of governments to negotiate international treaties. That is why we elect governments – to act on our joint behlaf. Scientists generally don’t pretend to have any expertise in foreign affairs in particular or politics in general.
My answer to your challenge is that we must weaken the stranglehold that business and the conservative press has on our political leaders, and we must improve the scientific literacy of our political leaders. These are no small tasks.
One final response: the scientific warnings are not based on “emotive” appelas but on cold hard facts and rational analysis – as hard as logical and objective as human cognition can make them.
Geoffrey, the “mindset” of our species is an evolved unconscious one [cognitive dissonance is the term] we don’t notice inconsistencies in our various beliefs. It’s not merely business leaders and shareholders” prone to this failing. The stronger an individual’s “certainty”, the more he becomes unlikely to examine his own prejudices carefully.
You’re correct in saying, “the scientific and environmental literature is replete with dialogue on the transition to a more sustainable setting”, but it’s a Curate’s Egg, and sadly the manner in which it is analysed tends to show scant adherence to the Rules of Scientific Method.
Blaming “the stranglehold that business and the conservative press has on our political leaders” (and) “the scientific literacy of our political leaders” is appealing, but is equivalent (even IF true) to saying that to have change we must have change.
Finally, while it may be true that “the scientific warnings are not based on “emotive” appeals but on cold hard facts and rational analysis”, what is all too often sprouted by people who may be employed as scientists, what they peddle is NOT Science per se but rather what they fervently and sincerely believe as emotively driven human beings. Therein lies the source of much of the most fiercely asserted claims re Climate Change.
Thanks again for making a contribution, Norman, and apologies again for the delay in responding – I have been travelling again.
I’m not sure if you wish to continue this conversation but if so, I would make three points in reply.
First, I used the term “mindset” not to describe our human species’ innate set of cognitive attitudes, but the world view that individuals build over their lives through innate cognitive attitudes plus upbringing plus education plus life experience.
Second, I agree that the perspective advocated by the press, in particular, is self reinforcing. Presumably the media influences public opinion (otherwise advertisers wouldn’t advertise) so the proprietors or managers of media companies are able to claim that they are merely reflecting public opinion when in fact they are also creating orthodoxy.
Third, I’m not sure of the precise meaning of your reference to climate change. I will comment briefly that the science of climate change is not settled to scientists’ complete satisfaction (and never will be), but it is settled for the purpose of making prudent policy decisions. To understand the political debate, it is necessary to understand the history of the rise of a group of vehemently anti-environmental conservative old Cold War warriors in the USA and the hooking of their political agenda to influential news outlets, notoriously News Corporation. To read only the newspaper debate itself without reading about its antecedents and Rupert Murdoch’s own personal world view leaves one with a very confused picture.