Raines says, “To address the climate emergency, we cannot wait for Generation Z to be appointed to leadership positions. I would encourage the leaders of our organizations to engage with Generation Z leaders today – and work together now.”
Addressing climate risks is a fiduciary duty
Ten years ago, board inaction on climate change was justified by the narrow assumption that climate risk was a “non-financial issue.” Now climate change poses a clear, foreseeable and material financial risk – potentially threatening assets, access to capital and market share – decarbonization has landed squarely within the board’s remit.
There is no excuse not to plan for this issue. Unlike emerging technologies whose future form and market impact are arguably unknowable, we know already about the risks and potential outcomes of climate change in the coming decade. It’s possible to look with frightening granularity at a realistic version of the future.
Yet, while most organizations do scenario planning around climate change, few of them are stress testing their business models against these scenarios. If investors are looking for assets with low climate risk exposures, boards have a clear mandate. They should start steering their organizations towards operating models, revenue streams and markets that will drive growth in a decarbonized economy, and divest or wind down operations with high climate risk exposure.