Thu, 01 Oct 2020

OPINION: Dear Adrian Gore, optimism is not enough

News24
29 Jan 2020, 16:14 GMT+10

Adrian Gore, Group CEO of Discovery Limited, is as well known in SA for his regular public expressions of optimism about the country's future as he is for heading up one of its most successful companies.

This positivity can be very valuable. Mr Gore recently wrote a post on LinkedIn which expresses similar optimism about our ability to tackle climate change. While it is good (and still very rare) to see a South African corporate leader speaking publicly about climate change, the post drastically oversimplifies the problem, and risks entrenching complacency in those who value Mr Gore's opinion.

There are two main reasons for this: first, Mr Gore's reasons for optimism involve the achievement of vast, unprecedented changes in the way we run our economies and our societies, but he frames them with no reference to the actors who must drive their implementation.

Second, while hoping that "our biological coding will kick in" as climate change intensifies, and that "the market will drive change", he makes no reference to the vested interests and market failures that will continue to work, as they have over the past two decades, against even the incremental progress that we are finally seeing now.

Climate change simply is not like many other challenges: you can't just donate to your favourite climate change charity and sit back, knowing that the hard work will be done by someone else. Mr Gore's post could engender in those who read it a sense that everything is under control, and that there is no reason for most of us to worry because the important people who make the big decisions are sorting it all out.

In fact, in relation to climate change, every one of us has a role to play in changing our own behaviour if we stand any chance of mitigating its worst effects. We also have a potentially more important role to play in convincing those who have the power to drive systemic change to change their behaviour.

In a world - and a country - where there is still only a fraction of the political will we need to deal with climate change, it is particularly important that powerful companies like Mr Gore's show leadership - not just with words, but with action.

READ: Fail to act on climate change and you're fired, says R570bn pension fund

Discovery's annual reports don't talk about climate change beyond acknowledging that it is a risk and reporting the company's emissions. Discovery Group's Environmental Policy, however, states that: "", and that "

Discovery's track record at developing ways to incentivise people to behave differently to improve their health and well-being puts it in a position to make a contribution to the fight against climate change, but it isn't using the resources at its disposal to do this. In some respects, it is doing the opposite.

For example, Mr Gore references our temporal bias: "Unless the threat is immediate and visible, it is ignored. So we make that international flight, in spite of the fact that just one return flight from London to New York produces a greater carbon footprint than a whole year's personal allowance needed to keep the climate safe." Discovery's Vitality programme rewards its members (full disclosure: myself included) with significantly cheaper flights, effectively incentivising customers to increase their carbon footprints. Ending this perk is one obvious way to change behaviour that is currently exacerbating the crisis.

Mr Gore is confident that "the market will drive change by allocating capital towards sustainable investing". He refers to BlackRock - the world's largest asset manager - "and its recent decision to make climate change a focus of its investment strategy". He creates the impression that Larry Fink woke up one morning and decided to help save the world, ignoring the decade and more of work by climate and shareholder activists (as well as some of its biggest clients starting to withdraw funds out of BlackRock) that essentially meant it was impossible for BlackRock to take any other position and maintain credibility as a responsible investor.

In addition to being South Africa's largest administrator of medical schemes, Discovery also has, among others, growing investment and life insurance companies. The company's position as an asset owner and asset manager is another arena in which it could influence the fight against climate change. Does it, for example, support responsible investment by integrating environmental, social and governance (ESG) issues, including climate risk, into investment and asset allocation decisions?

There is still a huge amount of work to be done: most of the world's financial institutions remain stubbornly immune to pressure to consider climate risk, and some of South Africa's financial institutions are among the worst offenders.

Mr Gore says that "regulation and nudges will accelerate" and that "corporate and public players will conceive new innovations". These things don't happen spontaneously: we need persistent, determined push-back against the significant vested interests in the status quo, and we need companies like Discovery to advocate for appropriate regulations and to innovate to incentivise customers to make the changes we need to make.

None of us can sit back and rest easy that the response to climate change is under control. Those with power and influence in the corporate sector should be directing significant time and attention to shifting their own behaviour, setting an example for their customers, creating the right incentives, and sending a united message to government that they will not continue with business as usual.

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