What is Climate Competitiveness?
—Assembled by Bruce Piasecki’s editor Peter Lynch
Over the last century and more, there has been a tense relationship between business and society, and how they interact with each other. A set of prejudices on both sides lead to a general understanding that business and society were at odds, especially when it came to our planet and the effects of climate change.
However, by the end of the 20th century, a new social contract began to emerge. Business and society, wealth and the commonwealth, began to be perceived as intimately related. With this change, I believe that we have reached a turning point toward a better future, which is rooted in a new concept: climate competitiveness.
What is climate competitiveness? At its core, climate competitiveness is about using your business, with all the tools of capitalism, to address and respond to large social demands.
Climate competitiveness is a comprehensive corporate response to a range of issues surrounding business and society. It is larger than the kinds of corporate strategy seminars you hear at the best business schools. Climate competitiveness involves the blending of private scientific and market knowledge, along with corporate culture and ambitions, to create solutions years ahead of when government might try to solve them with taxes or regulatory demands. And by creating such solutions, you can put your company or firm years ahead of its competition.
"Climate competitiveness is a comprehensive corporate response to a range of issues surrounding business and society."
Climate competitiveness engages the more positive forces in social change. This happens without revolution or social chaos. In fact, the opposite happens. Societies across the nations re-achieve the lost balance between business and society, between wealth and the commonwealth, in ways that redistribute wealth to those that are climate competitive (while those who aren’t lose).
But this is not simply an altruistic mission. (Although those who approach it with a sincere goal of benefitting society will succeed best.) The relationship between the financial success of a business and its efforts to create social good are intertwined. Creating innovative solutions requires capital in order to research and fund the efforts. And the solutions developed must bring in further capital in order to fund the next innovations.
Climate competitiveness is about balancing the cash flow needs of innovation with the arts of competitive frugality. People need enough excess in their lives to be creative and to know their roles in the expanding a globalized world. In the same way, the great value based corporates need enough excess in their firms to afford the major innovations found in oil and gas giant like bp. You can see how this approach re-engineers the pursuit of profit, to a way that benefits business and society alike.
"Climate competitiveness is about balancing the cash flow needs of innovation with the arts of competitive frugality."
That is what has been missed too often since the last financial meltdown: The people that are profiting also believe in investing along the lines of Environmental, Social and Governance metrics. This ESG movement is now domineering the oil valuations. While it is still a term of some debate, ESG is something you can see of social value in how bp positions itself for change. I find this hard to write about because every day the issues are hotly debated in the press and in the boardrooms I serve; yet what is clear that the winners are those on the path of climate competitiveness, and the losers are those refusing the new ESG monies.
Now, climate competitiveness may mean different things for different companies. For bp, it means a fundamental shift in energy sales and selection. At Trane, it means bringing the outside megatrends inside, through Human Resources retraining.
Regardless of how you define it in your field, the lesson is that the future worth of your firm lies in finding your role on this path of climate competitiveness.
Climate competitiveness involves a responsible, steady, resolve-based focus on lessons derived from human behavior and social movements. This book is designed to give you a deep understanding of the changed landscape we now face, and how you can resolve to embrace climate competitiveness to drive your success, and the success of our world.
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