Embrace the disorder
So, what’s the answer to ensure we curtail global warming without enduring net-zero transition risks? From a business perspective, it is best to assume the transition is going to be disorderly. The concept of an “orderly transition” seems very unlikely given the scale of the technological, economic and societal changes needed for decarbonization, especially if greenwashing or stalling on commitments delay the transition. Previous industrial revolutions have also been highly disruptive and disorderly.
Expecting governments to enact the right regulations in a timely manner is a dangerous waiting game. We’re likely to end up with a “too little, too late” scenario. It’s best to take lessons from previous transitions. For instance, the losers from the digital transition waited for change to impact them, rather than driving change themselves.
Instead, see a disorderly and disruptive transition – as in all periods of change – as an opportunity. Even in the COVID-19 pandemic, businesses that are agile, innovative and resourceful have thrived. Many have helped us to adapt to the pandemic by producing vaccines and personal protective equipment that save lives, to providing remote communication tools and home delivery services that help us continue our lives during lockdowns.
Businesses need to be innovative and visionary entrepreneurs. We are entering a new kind of industrial revolution and leaders must adapt or even transform their businesses to become part of the net-zero future – and avoid being adversely impacted by it.
For instance, many governments have committed to phasing out the internal combustion engine, but if the rollout of charge points for electric vehicles (EVs) is too slow then there could be a disorderly transition to EVs. But there’s also an opportunity for businesses.
Dedicated charging companies could win huge infrastructure contracts, utility companies could use charging points to drum up more demand for their clean electricity, oil companies could add charging points to their forecourts, even carmakers and investors have an opportunity. This all assumes that EVs will become the clean vehicle of choice. Other automakers may find technological solutions that unlock the commercial opportunity of using different fuels, like hydrogen.