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In a world of accelerating change, fortune favours the brave

9 May 2019

The ADE's Tim Rotheray has a message for governments and business

"Standing still is the fastest way of moving backwards in a rapidly changing world." - Lauren Bacall (Actress 1924 - 2014)

Earlier this month, Burger King announced that it would trial selling the entirely plant-based 'Impossible Whopper' burger in 59 of its US restaurants. If successful, Burger King will roll out the Impossible Whopper to all 5,700 stores. It is designed to taste just like a beef burger and, apparently, it works - Eric Bohl, a meat industry lobbyist, said "If I didn't know what I was eating, I would have no idea it was not beef".

Back in the UK, the Chancellor announced in March that individual gas boilers will be banned from all new homes from 2025.

These two seemingly unconnected events are vital markers of the pace of change in environmental awareness and carry a message to government and business. Both these decisions were unimaginable just a couple of years ago. The burger is a central icon of US culture and the gas boiler is the staple of home heating in the UK. For mainstream companies, and the Conservative government, to take these decisions shows how quickly the impact of emissions, food choice and waste are taking centre stage. The critical point is that the pace of change in both awareness and action is accelerating, and fast.

Humans have a bias towards thinking that trends are linear. In the 1800s, Thomas Malthus wrote about the risk of human populations outstripping food supplies because he assumed that farming productivity rises were linear. People tend to think that the world population is going to keep rising even though we already know it will plateau at about 10-12 billion.

This tendency can lead us to assume that pressure to act on climate change will also rise linearly. But the rise we are seeing in awareness and in demand for action is closer to exponential. Consider the change in your own awareness from the 1990s compared to the 2000s and the 2010s. That increasing pace means that, what looks ambitious now, may very well look obvious, conservative or even weak in just five years.

The Impossible Burger and the ban on gas boilers both signal profound structural implications for business. If meat alternatives really take off, consider the enormous impact on the farming supply chains from feed, to machinery and medication. If the new homes announcement signals the start of the decline of Europe's largest domestic boiler market then the implications for installers, wholesalers and manufacturers could be huge. And, as this pace of change is accelerating, the more that time passes, the more profound those impacts become.

This pace of change is great cause for optimism. The growing pressure to act is partly because it is more attainable. The technological shifts are genuinely astounding. In 10 years electric vehicles have gone from the glorified wheelbarrow of the G-Whizz to record-obliterating supercars that can wipe the floor with their petrol engined counterparts. Renewable power has gone from among the most expensive to the cheapest forms of generation.

But those same shifts are causing fundamental change in major companies. GE, who bought Alstom's turbine business, is now making 12,000 people redundant in that same business as renewables are crashing global demand. VW Group has restructured to invest up to €70bn, yes billion, into electric automotive and batteries by 2030. This transition is driving alliances few would have conceived five years ago, like Nissan and Ovo Energy working together on domestic power storage.

This is the crux of such a rapid and accelerating transition: It is going to be deeply disruptive, causing great loss of value in some areas and driving immense new opportunities in others. Recognising that this is happening is critical. Being aware and embracing it, understanding that this change will restructure the way we do everything from heating to eating, needs to be at the very core of business strategy. It demands fundamental rethinking of how companies are structured, transforming existing R&D programmes into whole new areas previously considered niche, and careful consideration of the training and development of people whose skills need to adapt for a new economy. And this is not because it is good PR, it is because it is good and essential business. Like it or not, this is where the economy is moving to. When embraced, it is wonderfully exciting. A vital reconnection of the economy to the environment. Where ignored, it will lead to business collapse which, I suspect, will happen far faster than people imagine.

This accelerating change is the backdrop to the upcoming Committee on Climate Change's report on raising the UK's target of an 80 per cent cut to achieving a net zero carbon economy by 2050. By definition, this report must be more ambitious. The CCC's recommendations on increasing ambition are very unlikely to suggest a tweak of the policy dial: a little more effort on insulation and car charging is not going to deliver the kind of change required - the CCC is considering how we take all carbon emissions out of everything in 30 years!

The precise same structural challenge facing businesses also faces government. Such a rapid decarbonisation cannot happen when energy security policy has no focus on carbon or when low carbon power generation policy has no focus on security. Progress on change must be slowed when policies driving business decarbonisation such as green fleets, building efficiency, low carbon heat and carbon pricing are siloed across at least four government departments. The structural change required in businesses, embedding carbon and environment into the heart of business planning, is just as vital in government.

So, whether you are in government or in business (or the third sector), this change is coming and it's accelerating as it approaches. The question now is: are you building enough momentum to ride that wave, or is it going to pull you under and leave you as debris in its wake?

This article originally appeared as a blog on the Business Green website on 16th April 2019

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