Why supply chains will test the 'green recovery'
It's where the pandemic meets climate action.
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The Worldwise View
Let’s talk about the bottom line.
Yesterday, with election results still hanging in the balance, the United States formally withdrew from the Paris climate agreement (BBC + Reuters).
The significance of this for global efforts to tackle the climate crisis has been debated quite a bit. The country is the world’s second-largest greenhouse gas emitter, and some were concerned the withdrawal would encourage others to continue biding their time on emissions-reduction commitments. It’s a good sign that other major economies have since stepped in to fill that vacuum—most recently China and Japan.
The Paris Agreement is key as a framework for action at the government level, and powerful nations can spur others along. But the climate fight has many fronts. And business is an important one.
Recently I tuned into an online conversation between Kevin Sneader, global managing partner of McKinsey & Company, and Jan Piotrowski, The Economist's business editor, about the impact of Covid-19 on corporate sustainability.
It’s not usual for me to delve into the world of business. This conversation drew me for two reasons.
One, the pandemic came as many business leaders were beginning to take climate action and nature protection much more seriously. As with any crisis, the COVID disruption translates to opportunity for change—I wondered how that world sees sustainability prospects at this point in time.
And having had discussions about some of these issues with Jan Piotrowski in the past, I had a hunch the conversation would be thought-provoking.
COVID and climate as comparable threats
The first point that came through clearly from Sneader’s remarks is the growing realisation—among corporations, governments, organisations—of a commonality between the pandemic experience and climate change.
It’s been a while since we’ve seen comparisons between the two crises—they swirled around quite a lot before the summer. At the time I recall highlighting this piece on Axios by Amy Harder, who analysed whether or not comparisons are on the mark. Now a recent poll suggests about two-thirds of people in 14 countries are equally concerned about the two threats.
Sneader put the comparison this way: the pandemic was foreseeable, he said, and we’d missed the signs—and that’s just like climate change, which will disrupt the world to a comparable degree.
He said the initial shock of the pandemic meant conversations about the climate and sustainability were pushed to the backburner at the time of the January meeting of the World Economic Forum in Davos. The Guardian’s Fiona Harvey has reported that was still the case months later. But there’s been added urgency since then, according to Sneader.
Prospect of a green recovery
He added that even back then in Davos, there was a sense that we need to think differently about climate events. That’s because those events aren’t theoretical or remote: we’re experiencing them now. And that means business investment equations are changing.
Let me add a parenthesis here: to say “we’re experiencing them now” is to speak from a North-centric point of view. We know that several parts of the developing world have been experiencing them for quite some time. The phrase reveals a bias that partly explains the climate inertia of many years.
When the conversation turned to green recovery, Sneader said it is a stronger prospect in the long-term. And when pressed on whether building back after Covid-19 can be sustainable in the short-term, he added that now is the time to test this—because businesses have to change how they work to deal with the coming waves of the pandemic.
Supply chains—the processes involved in producing and distributing a commodity—could be an important testing ground in the short-term.
Resilience over efficiency
Pre-COVID, the priority was for goods to move efficiently, Sneader said—but now there’s more thought given to the resilience of supply chains, and how climate threats like fires and floods come into that picture.
Presumably a resilient chain is also more reliable, and we’ve seen how crucial reliability is during the pandemic. Reports have documented cracks in the chain during the rush for medical supplies, and how fragile the chains can be for what are often life-saving supplies. Disruptions in the supply of drugs and insecticides are also implicated in how the pandemic hinders the fight against malaria.
There is, of course, one massive supply-chain test looming, and that’s the delivery of Covid-19 vaccines. Issues with infrastructure and keeping vaccines cool could leave 3 billion people without access.
The resilience of supply chains is not where the climate link ends.
Where the chain begins
This next point isn’t one made during the conversation with Sneader. But it’s worth noting that where some supply chains begin can also be intimately linked with climate change.
Your supply chain might be climate-resilient, serving your bottom line well. But is it undermining efforts to cut emissions and reduce the risk of another pandemic while you go about your business?
Climate change and COVID meet here too: in the natural resource extraction that keeps some of those chains running. Deforestation driven by supply chains matters for emissions, and it matters for disease emergence. There are plenty of warnings from scientists that destroying nature raises the risk of new diseases. Our demand for meat is a big part of that picture.
Sneader noted that the urgency to act on climate change is often tempered by economic reality. Perhaps one of the many lessons from the pandemic is that economic reality doesn’t just exist in the here and now—that the (future) costs of inaction can be dramatic, and overwhelming.
A final note from the week’s soundtrack 🌎
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