Business leaders and the environmental movement differ on many things. But they largely share one common perspective on climate change, which is to see it through the lens of conservation.
For environmentalists, a conservation mindset is deeply rooted – it’s where the movement came from. Chemicals polluting our rivers? We need to clean them up. A hole in the ozone layer? We need to repair it. We need to restore and conserve the status quo, back to the way it was before it was disturbed.
For business leaders, a conservation mindset is also instinctive – and attractive. We continue to do what we do, and the world continues to be what it is, but we need to take more care than before to do no (or at least less) harm as we go along. Less waste. Fewer emissions. That’s how things can continue. The clue is in the name: sustainability.
Climate change, however, is not a conservation problem. We are not trying to conserve the status quo, because the status quo is what is unsustainable. We are not even trying to return to an earlier status quo, which would be undesirable, unattainable and incompatible with a population of eight billion people. Climate change is a transition problem.
At one level, we know that. That’s why we talk about transition plans. But the conservation mindset might help to explain why we are not very good at them.
And we really are not very good at them. The Transition Pathway Initiative’s State of Transition Report 2024 concludes that “credible transition planning and implementation remain limited”.
More than 90 percent of companies disclosing to the TPI Centre recognise climate change as a risk and/or opportunity for their business, and 80 percent have a process to manage climate risk – both stances that fit with a conservation mindset. But fewer than 50 percent say they incorporate climate change risks and opportunities into their strategy, or disclose the actions planned to meet their emissions reduction targets – stances that suggest a transition mindset.
CDP’s latest report into the state of transition planning shows a similar picture. Over three annual cycles of disclosures, the NGO tracked around 1,300 companies that said in the first year that they would develop a transition plan in two years. Of these, 32 percent advanced to the initial steps (1 and 2) of the CDP planning journey, but only 4 percent (of the whole group) advanced to the later steps (3-5).
The initial steps – establishing emissions inventories and identifying risks, opportunities and scenarios – fit with a conservation mindset. It is the later steps, requiring strategies and financial plans in pursuit of targets, and engaging with policy – the steps that few are undertaking – that require a transition mindset.
The bigger insight from both of these reports is that the stance perhaps most indicative of a transition mindset – a plan executed against a vision not just of emissions reduction targets, but of the strategic role the company will play and prosper from in a decarbonised economy – does not feature in the TPI or CDP criteria.
The evaluation frameworks themselves reflect a conservation mindset: a direct focus on emissions reductions (removing what is disturbing the status quo), with insufficient attention to the new world we need to bring into being for such reductions to be politically and financially achievable.
The UK’s Transition Finance Market Review looked, from its set-up, to be grounded in the same mindset, focused on how to improve the supply of transition finance, with insufficient attention to the industrial policy required to enable the demand.
The resulting review, however, is an exciting example of a transition mindset. It has been told clearly in its consultations that the way to scale transition finance has less to do with mobilizing capital and more to do with creating a financeable transition.
Its recommendations go well beyond finance, including the reform and elevation of the business-government-finance Net Zero Council to “focus on the development of granular real-economy sector decarbonisation pathways”.
The open question is whether the review will be received with a similar mindset, particularly given its inside-out logic that set “scaling transition finance” as the goal. Yes, we need sector-level industrial strategies just as prescribed – but are we about to adopt them just because the banks say that’s how they can make enough money to profitably grow their transition finance businesses?
Escaping the conservation mindset is hard, because the language and structures of the climate agenda reinforce it.
The earliest initiatives for responsible investment were “stewardship” funds. Today investors and businesses are encouraged to think of climate in terms of risk, which relates to a status quo under threat. Even the transition itself is recast as “transition risk” to manage. The construct of “ESG” positions climate alongside other risks to be managed for the sake of the organisation.
Environmental activists don’t challenge this mindset, because many of them share it. The same goes for investors (outside a small core of impact investors). Even religious teaching reinforces the conservation mindset, with themes, depending on your creed, of stewardship, avoiding harm, protecting God’s creation, living in harmony with nature and repairing the world.
A transition mindset looks quite different. It recognises that our objective is not to preserve the status quo, but to become something we have never been. That means, instead of avoiding risk, embracing risk – responsibly, systemically and entrepreneurially.
It is an optimistic mindset, based on a vision of what can be and the opportunities created – but also practical, based on the realities of financial costs and rewards, likely winners and losers, and their respective interests and power.
Who has such a mindset? While still a minority, there is a rich range of examples from across the field of climate actors, each with plenty to learn from.
- A small number of corporations seeking to realise a vision they can flourish within. Think cable-maker Nexans anticipating the impact of electrification and sustainability expectations on the supply of primary copper, “turning resource scarcity into competitive advantage”.
- A small number of countries investing to establish leadership and global competitive advantage for their industries. Think China in renewable energy and electric vehicles.
- Clean tech and climate tech investors, backing technologies that the transition will need, and seeking to establish the ecosystems that will provide a market for them.
- Pro-science environmental groups, challenging the tech-aversion of mainstream environmentalism and making the environmental case for nuclear energy, GM foods, cultivated meat etc. Think WePlanet in Europe (for disclosure, I am a board member) and The Breakthrough Institute in the US.
- Supporters of climate action on the political right. Our research across many countries has found a substantial group of people on the right whose support for government action on climate is as high as in the corresponding group on the left, but who resist the prevailing “social state” narrative on how to achieve it. This group is more naturally aligned with the transition mindset.
The need for a transition mindset should be self-evident. Yet conservation thinking is so prevalent, and can feel so natural and right, it is easy to let it go unchallenged. Exposure to these examples of transition mindsets can hopefully provide the challenge needed.
Simon Glynn is founder of Zero Ideas, challenging leadership thinking on climate action.
