This article proposes above all else, that sustainability requires businesses and governments to think differently about time.
Achieving sustainability requires two things to happen differently. Firstly, action needs to be taken on a number of fronts to accelerate the pace of change. Secondly, timeframes across business and government must be lengthened to keep the long run in mind. These two approaches may seem diametrically opposed to one another, but they are both essential to achieving sustainability.
1. Action now
While there are certainly a great many things happening in sustainability, there is still more that could be done. Action needs to be taken now to accelerate the pace of change in the most pressing and unsustainable areas of human behaviour.
We have talked about this in previous articles, but I will repeat the message because of its importance. The burning of coal is a serious problem; this practice is dangerous and should be eliminated as quickly as possible.
Take for example the green energy darling Germany. For all its expenditure on renewables Germany still generates 40% of its power from coal. This behaviour is simply not compatible with a stated desire to keep warming well below 2 degrees Celsius and to ideally limit temperature increases to 1.5 degrees Celsius. This is a perfect example of where rhetoric and reality are found to be in conflict.
Some countries including Finland, France and the UK have set end dates for coal power generation by 2030. Other countries are in the process of debating this issue. The countries that have not already set a timetable for this should bring forward legislation at the earliest opportunity.
What is really needed to achieve these targets, is for a complete phase-out of coal power to have taken place by 2030, at the latest. Ideally this transition should happen as soon as possible and include developed and developing countries.
This one issue of coal powered electricity generation perfectly encapsulates the dialectic of making time for sustainability. Action needs to be taken now, in order to hit targets which in political terms are extremely distant. These targets may seem distant, but in geological terms, they are but a moment away. The importance of immediate action, whilst keeping the long run in mind cannot be emphasized strongly enough.
2. Keeping the long run in mind
Time horizons are critical to the sustainability agenda. Timeframes across business and government must be lengthened to keep the long run in mind.
The problem of short-termism is most prevalent in business. But as we know, governments can also be guilty of focussing on the short-term implications and political ramifications of decisions they take.
Let me be clear, sustainability doesn’t care about your election; it doesn’t care about your quarterly earnings forecast. What sustainability cares about is long-term challenges and how those challenges are going to be solved equitably.
The supremacy of quarterly earnings forecasts must end. They are bad for people; they are bad for the planet and ultimately they are bad for profits.
A great example of a business that is keeping the long run in mind is Unilever. Under the leadership of Paul Polman, Unilever is targeting to double its size while reducing its overall environmental footprint and improving its social impact through the Unilever Sustainable Living Plan. This is the kind of thinking that sustainability demands.
Paul Polman is unwavering in his belief that in a volatile world of finite resources, that running a business sustainably is vital for the long-term growth of the business. He abolished quarterly earnings forecasts shortly after his appointment in 2009. As we can see from the chart above, his methodical approach to sustainability has resulted in a steady increase in shareholder value.
The Unilever example makes it clear, that sustainability and keeping the long run in mind is good for people, it is good for the planet and ultimately good for profits. What could be better than that?
Many of the arguments in favour of short-termism can be quite easily debunked. Other businesses like Legal & General are no longer giving its shareholders quarterly updates on its financial performance. They argued that the frequent reporting promotes short-term thinking, when long-term returns and prudent investment management is more important than short-term gains.
With Legal & General encouraging companies in which it invests to end quarterly reporting, the hope is that momentum can start to build behind businesses who are taking the long run in mind. A better world is possible and it demands long-term thinking and planning.
What you need to know
This article proposed that above all else, that sustainability requires businesses and governments to think differently about time.
I argued that specifically two things need to happen differently.
1. Action now
2. Keeping the long run in mind
The first part deals with the clear need to begin to set timetables for the elimination of the most unsustainable aspects of human behaviour.
The second part deals with eliminating short-term thinking and transitioning towards a corporate world, where plans are laid out for decades and not quarters.
With clear evidence of the benefits of long-term thinking, we can hope that fortune begins to favour businesses that are taking action now to build a better world and keeping the long-term in mind with bold, ambitious targets for the future.
We will learn more about sustainability in subsequent posts.
Thank you for reading
By Barnaby Nash