Can the world’s billionaires lead the climate change fight as politics fails?

The business community makes almost all the products the world consumes and can limit environmental impact at the design stage
Governments and politicians have simply failed to get their act together on a wide range of issues, climate change chief among them

Andrew Sheng

Published: 3:30am, 11 Sep, 2021

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Technically, the US “war on terror” is over as of today, September 11. Since the 2001 attacks on New York and Washington, the United States will have spent US$4.7 trillion waging war by the end of 2022 – excluding a further US$1.1 trillion in interest on debt used to finance the wars and US$2.2 trillion in future obligations for war veteran care – according to the Brown University Cost of War study.

The human cost was more than 900,000 people killed and 38 million displaced. Look how US Treasury debt rose from US$5.8 trillion in September 2001 to US$28.4 trillion by August 2021.

Such financial and human costs of the “war on terror” might be trivial compared with the coming climate change costs to the whole planet. War costs only add to climate warming. The Brown University study found that the US Department of Defence was the world’s largest institutional consumer of fossil fuels and a key contributor to climate change.

Today, the Intergovernmental Panel on Climate Change has warned that the planet is running out of time to deal with the problem. This is an existential crisis not just for one country, but the whole of mankind. Like the Covid-19 pandemic, we need a whole-of-government and whole-of-society approach to act decisively.

The European Union has got its act together with its Circular Economy Action Plan. It sees the problem clearly: “There is only one planet Earth, yet by 2050, the world will be consuming as if there were three. Global consumption of materials such as biomass, fossil fuels, metals and minerals is expected to double in the next 40 years, while annual waste generation is projected to increase by 70 per cent by 2050.”

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The world spent US$2 trillion on military expenditure in 2020, four times the amount spent on energy transformation. The first can only add to global carbon emissions and more human and natural destruction, while the other addresses our common fate.

Why should business take the lead in this war on climate change? The simple answer is that the business community makes almost all the products that the world consumes, including weapons of war.

Just 100 of these private and state-owned companies have been responsible for more than 70 per cent of global greenhouse gas emissions since 1998, according to the Carbon Disclosure Project. Most products’ environmental impacts are determined at the design phase, so the business sector can retool these green products quickly. That is the profit opportunity.

Another reason is that governments and politicians simply have not got their act together. Harvard business strategist Michael Porter and Katherine Gehl put it this way in their 2020 book The Politics Industry: “Most people believe that [the US] political system is a public institution with high-minded principles and impartial rules derived from the Constitution. In reality, it has become a private industry dominated by a textbook duopoly … incapable of delivering solutions to America’s key economic and social challenges.”

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Put climate change in that basket of problems. The authors recognised there are no scientific or business model barriers to finding solutions to tackle climate warming. There is also no shortage of money, with central banks providing the means to tackle the pandemic and financial crises.

We have an existential crisis wherein the rich are getting richer. Meanwhile, the people in the bottom half of society are paying for climate change disasters through loss of habitat and jobs.

This is not sustainable for politicians or for businesses. In 2012, billionaire businessman Richard Branson said, “our only option to stop climate change is for industry to make money from it”.

After the pandemic and this year’s hurricanes, forest fires and floods, businesses around the world are learning there is no alternative except to embrace climate change in their business models. The “ business as usual” approach has shifted to adaptation and mitigation.

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One reason for the change of mind is that the finance industry realised climate change imposes huge financial risks. It created the Task Force on Climate-Related Disclosure to pressure the industry to act on climate change through financial disclosure.

The task force reported US$640 billion in costs from climate-related natural disasters, with up to US$43 trillion in financial assets at risk by 2100.

If politics is toxic, only the corporate sector can lead action on climate change. The top 500 asset managers control more than US$104 trillion of assets, with the top 20 controlling 43 per cent. Convincing a small number of key corporate owners to act will make a serious difference on climate action.

One example suggests serious climate action by the global rich is feasible. Thanks to Brazilian President Jair Bolsonaro and his profit-driven business allies, the Amazonian rainforest is disappearing rapidly.

The Amazon stores the equivalent of four or five years worth of human-made carbon emissions, up to 200 gigatons of carbon. At US$50 per tonne for carbon, the Amazon is worth US$10 trillion to the world. By comparison, Amazon.com’s market cap is almost US$1.8 trillion.

The top 1 per cent of the world’s wealthiest people held US$173.3 trillion in 2019. Could some friendly billionaires club together to buy the real Amazon from Brazil, whose total external debt is US$548 billion?

This might sound like a joke, but climate change is deadly serious. If business is not serious about climate change, then start scrambling to get on the next billionaire’s space flight, just like what happened in Kabul.

Andrew Sheng writes on global issues from an Asian perspective