Climate risks: What can business learn from science?

Nowhere is global warming starker than in the Arctic, which is warming twice as fast as the rest of the world. The risk this poses for the environment, and therefore the global economy, is immense. Arctic Basecamp, an outreach event at the World Economic Forum in Davos, provided a polar science basecamp experience to raise awareness about the worldwide implications. One goal was to nurture collaboration between science, business, and regulators. There we spoke with Johan Rockström, the internationally-recognised Professor of Earth System Science at the University of Potsdam and the Director of the Potsdam Institute for Climate Impact Research.

Hello Johan. What do you think is the biggest practical obstacle to meeting our climate goals in this coming decade?

The biggest obstacle today is to link science with policy and business. There is no kind of blueprint solution out there; it is a question of integrating a new scientifically based paradigm at the core of all business, and for all types of financial institutions, cities and for our economy at large. We are starting to see the positive developments, for example, when companies and cities adopt science-based targets for climate. But targets have to go beyond climate and also incorporate water, biodiversity and land protection, to name but a few of the planetary boundaries.

The obstacles are neither economics nor technology. Decarbonising actually makes economic sense; we have plenty of evidence today to prove it. We have competitive solutions to phase out fossil fuels – yet, we are still not doing it fast enough. Why? The main issue is that we are not capable of integrating targets and boundaries and translating these to economic policies and regulations. In other words, there are vested economic interests in holding on to the status-quo. But this puts all future generations at risk and slows down innovation and technological development.

If 1.5°C were a hard boundary, that would mean we would have to phase out combustion engines by 2030 to 2035; no more investment in coal; decarbonising our whole food system. It would act as a spur to innovation – which is what we all want to see.

You are an expert in the field of “earth systems”. Could you explain what this means?

The earth systems are all the biophysical systems on Earth (such as water, nature and climate) that regulate the state of the planet. Our planet is a very tightly connected, self-regulating system. You could compare the planet with the human body: we have a certain number of organs (our lungs, heart, kidneys), all of them interact and our health depends on all of them.

The obstacles are neither economics nor technology. Decarbonising actually makes economic sense; we have plenty of evidence today to prove it.

It implies that natural systems are all connected: greenhouse gas in the atmosphere, trees in the Amazon, the coral reef systems, wetlands, forests.

Interestingly, earth systems also include the so-called cycles of the planet. For example, the carbon cycle is all the carbon dioxide that flows between ocean, vegetation on land, and the atmosphere. There are also the global cycles of water, phosphorus, and nitrogen. All these big cycles are also part of the earth systems. Together they interact to regulate the state of our planet.

As a scientist, what do you expect from the financial community regarding climate change?

I expect a lot from them! Financial institutions are sitting on the tap that determines where investments are made and where savings are made. They largely control the lever that determines the direction where our societies go. In the next few years, financial institutions should sit closely with scientists to discuss how to set science-based targets for a sustainable and resilient planet.

Things are moving: many financial institutions such as BNP Paribas and BlackRock are committing to investing more sustainably. We see pension funds withdrawing from fossil fuels, the largest example being Norway’s Wealth Fund, which in June 2019 announced it would sell more than $10 billion of fossil fuel stocks. Things are moving – but not fast enough. We now need to scale. Ideally, we should globally adopt a principle not to back any more investments in fossil fuel-based infrastructures.

Are you optimistic about the future?

Cautiously optimistic… I have my moments of hope and my moments of deep concern. There is still light in the tunnel, we can still transform ourselves into a manageable future. But time is running out. Scientifically, we have to consider that the planet is now in a state of emergency. It is very serious, but luckily, we have not passed any catastrophic thresholds yet. But we have now entered the decisive decade where we need to cut global emissions by half to have a chance of securing a manageable future for humans on Earth.
 

About Johan Rockström Johan Rockström is a professor and a scientist on global sustainability issues specialised in global water resources. He is also a consultant in both private and public sectors as well as an adviser for sustainable development issues at international events such as the World Economic Forum, the United Nations Sustainable Development Solutions Network (SDSN) and the United Nations Framework Convention on Climate Change Conferences (UNFCCC).