What people and planet need

While 40,000 delegates met for COP26 in Glasgow on November 5, Jeff Bezos, the founder of Amazon and Blue Origin spoke at the Ignatius Forum in Washington, DC, about his vision for humans living and working in space colonies because the home planet, earth, must be restored and protected.

According to Bezos, it’s not that we give up on earth. We will build large, many-mile-long colonies, with their own ecosystems, including rivers and forests, using resources from near-earth objects such as asteroids, close enough to earth that we can visit this uniquely precious blue planet. In centuries to come, when large numbers of people are born and live on these colonies, they will visit a restored and protected earth the way we visit Yellowstone National Park today.

Back in Glasgow, the number of fossil-fuel industry delegates at COP26 outnumbered those from any single country. And we can be quite certain that the fossil-fuel company of tomorrow will, if it is survives, look nothing like the one of today. According to RethinkX, we are on the fastest, deepest, and most profound disruption of the energy sector in over a century.

Produced by the end of COP26, the Glasgow Climate Pact requires governments to revisit and strengthen their nationally determined contributions (NDCs) in time for COP27 in Sharm El-Sheikh, Egypt, next year, because current commitments are far short of what is needed. We are currently on track to overshoot the agreed target of 1.5ºC by far, possibly reaching a catastrophic 2.4ºC by the end of the century.

If the world wants to limit global warming to 1.5ºC the world would need to additionally reduce emissions by the equivalent of two years' current annual emissions by 2030. If the goal was a 2ºC rise, then the equivalent additional reduction would be one year’s total emissions over the next eight years.

While RethinkX predicts that “it is both physically possible and economically affordable to meet 100 per cent of electricity demand with the combination of solar, wind, and batteries (SWB) by 2030 across the entire continental United States as well as the overwhelming majority of other populated regions of the world,” Jeff Bezos thinks that our power consumption can only be satisfied and the planet protected if we start to generate power and move heavy industry into space.

That is why Bezos is banking on Blue Origin to become the gateway for moving millions of people to live and work in space in the foreseeable future.

One certainty: radical transformations

Whichever way it goes – whether we manage to decarbonise by 50 per cent in the next eight years or not, if the developed countries muster the will to pay the promised US$100 billion per year to assist developing countries with the transition that they have largely caused or not – once we combine the accelerating climate change, the loss of biodiversity, the increase in computing power, the innovations in nano-technology and robotics, biotechnology, and other fields, we can be sure that the near term holds the kind of transformation not witnessed before.

And since we are dealing with many inter-related complex systems, we also know that the change will be very unpredictable – some actions will have large, magnified effects, others minute; they can emerge close to where the action took place, others far away; sometimes immediately, sometimes with great delay.

What does it mean for those who govern?

Governing bodies across all types of organisations need to transform the content and process of governance as fast as they can. Their organisations will be rattled by the storms of change. Some will thrive in the new environment if they are agile and governed in an integrated manner, because with change there are always many new opportunities.

All organisations will face new risks. The chart on climate-related risks, opportunities, and financial impact developed by the Task Force on Climate Related Financial Disclosures (TCFD)

four years ago is very useful for mapping some of the risks and opportunities.

At the same time, it is already outdated, because one of the significant developments coming out of the Glasgow Climate Pact is the agreement that we need to think, act, and account in far more integrated ways.

Modern governance is based on integrated governance frameworks that bring the fulfilment of the organisation’s purpose together with the regeneration of all the capitals that contribute to value generation in conceptual ways as well as throughout the organisation – including products, brands, risk governance, oversight, and accounting. Such an approach to governance is radically different from some of the dangerously outdated governance approaches still being promoted today.

There are still many boards, where climate, adaptation, or other aspects of ESG are not yet discussed at every board meeting. But even where these topics are already at the forefront of governance, strategy and decision-making, even large multinationals are still using outdated and unreliable data that is manually collated on spreadsheets. According to my colleague at ISO and Syntegra-ESG’s strategic business partner, Peadar Duffy, the ESG solutions lead at Archer Integrated Risk Management (ArcherIRM), the days of manual spreadsheets are rapidly coming to an end.

Once the IFRS International Sustainability Standards Board (ISSB) becomes operational next year, and global ESG disclosure standards are issued, disclosures over vast amounts of data points will be required to be machine-readable in standardised format (XBRL) and connected to source data. Limited assurance statements will then follow soon, and well before 2030, board, shareholders, and other stakeholders will be able to draw on audited reasonable assurance.

That will not be the end of the journey by far. What makes the difference will not be ESG data or conformance with more or less meaningful standards, but how boards integrate the information and make materially important innovation decisions that transform business models, and provide the solutions that people and planet so desperately need.

Dr Axel Kravatzky is managing partner of Syntegra-ESG Inc, vice-chair of ISO/TC309 Governance of organisations, and the co-convenor and editor of ISO 37000 Governance of organisations – Guidance.

Disclaimer: the views presented are those of the author and do not necessarily represent those of any of the organisations he is associated with.

Comments and feedback that further the regional dialogue are welcome at axel.kravatzky@syntegra-esg.com