Al Gore: Business Will Drive Progress on Climate Change
The former vice president talks about investing in the transition to a sustainable economy.
As the Donald Trump administration takes office, the outlook for U.S. energy policy is uncertain. But you won’t hear a word of despair from Al Gore. Speaking at Stanford Graduate School of Business on November 14, the former vice president says a “sustainability revolution” is already sweeping the world, with “the speed of the information revolution and the scope of the industrial revolution.” And it’s driven by forces bigger than American politics.
For starters, Gore says, there’s brass-tacks economics — especially now that the hidden, “external” costs of our carbon addiction are starting to hit home in the form of devastating storms, droughts, wildfires, and other unmistakable consequences. Indeed, the World Economic Forum last year named climate change the number one threat to the global economy.
Clean energy, meanwhile, keeps getting cheaper, and parts of the world have already reached grid parity, a threshold below which it simply costs less than electricity from fossil fuels. “Market forces are going to be very powerful,” Gore says. “Some of the proposals [Trump] made, like bringing back all the coal jobs,” just won’t make business sense. “Companies and home owners are moving toward efficiency.”
That doesn’t mean leadership no longer matters. Without the efforts of President Barack Obama, President Hollande of France, and others, the Paris Agreement on climate change, a breakthrough pact among nearly 200 countries, would not have happened, Gore says. The U.S. must continue to provide leadership, he says, even if it’s no longer coming from the White House.
But the vision Gore laid out is of a world in which nation-states no longer dictate the pace of change. The sustainability revolution is increasingly driven by local projects closer to the ground and enlightened self-interest in the private sector. And central to that movement, he says, is the role of investors in spotting opportunities and financing forward-looking businesses.
Gore, who now chairs Generation Investment Management, says this revolution is “the largest investment opportunity in the history of business,” and he called on MBA students in the audience to take part. “There’s hardly any other walk of life in which you can have a bigger impact than in organizing businesses and allocating capital in ways that build the future.”
Here are seven key takeaways from Gore’s Global Speaker Series and Conradin von Gugelberg Memorial Lecture.
Don’t Jump to Conclusions — Yet
Candidate Trump called global warming a hoax propagated by China to hobble American manufacturing. But Gore seemed inclined to discount that as bluster. “He deserves a chance to formulate his policies,” Gore says. But a continuation of such rhetoric by President Trump or a move to rip up the Paris Agreement would demand swift answer. “We can’t run the risk of normalizing statements and actions that are out of bounds in the view of most Americans.”
It’s More Than Lousy Weather
Climate change, Gore says, is heating up the atmosphere and the oceans, creating superstorms and flooding in some areas and massive droughts in others. That’s a familiar story; what’s less well known is that it’s also causing geopolitical instability.
Crop failures have driven up food prices worldwide, sparking riots in 60 countries. In Syria, the worst drought in history turned farmland into desert and caused mass migration into the cities — an element in the conditions that led to civil war. Food and water shortages throughout the Middle East and North Africa are fueling a refugee crisis that’s destabilizing the European Union.
A Tipping Point Has Been Reached
Gore says change is “bursting forth” around the world, and one reason is the sudden realization that our age-old assumption — that the world is too big for humanity to have any lasting impact upon it — is false. Even in the U.S., cities in states like Kansas and Missouri have adopted 100% renewable energy.
Especially where renewables are approaching grid parity, Gore says, it’s like the difference between 32 degrees and 33 degrees: “That’s a difference of more than 1 degree. It’s the difference between ice and water — or between capital markets that are frozen up and markets where funds are flowing in search of new opportunities. That’s happening now.”
It’s Picking up Speed
“It was just announced that we’ve now had the third year in a row with no increase in global CO2 emissions,” Gore says. Worldwide, solar and wind power are far ahead of projections, and “since 2010, investment in new generating capacity in renewables has surpassed that for fossil fuels.” China is launching a cap-and-trade system, a way of putting a price on carbon emissions, and massive plans are afoot in countries like India and Argentina.
Learn to See the Full Spectrum
Gore’s investment firm has a kind of “founding metaphor.” If you think about the electromagnetic spectrum, he says, visible light is only a fraction of the total. “But because it’s all we can see, we tend to assume it’s the whole story.” Likewise the metrics we use in business and governance ignore externalities like carbon pollution, so we’re blind to the true cost of our choices.
“The numbers on Bloomberg screens capture only a narrow slice of the value spectrum. It’s up to investors and business leaders to find the value in the rest of the spectrum,” Gore says. “That’s where you can find the emerging risks and emerging opportunities.”
Why the Paris Agreement Matters
Gore acknowledged that the Paris Agreement didn’t go far enough. “All the commitments put together — even assuming all of them are kept — would still fall far short of what’s needed to keep us below a catastrophic level of damage.”
The real value of the accord, Gore says, is that nearly 200 countries agreed to a common goal of net-zero emissions and committed to an ongoing process. “It gives us a base from which to make more progress. Every five years the agreement requires a review and ratchet, with every single nation looking carefully at whether they can increase their level of ambition.”
Sustainability Will Prevail
Gore called on students to be vigilant “to prevent the legacy fossil-fuel providers and generators of electricity from using their political and economic power to block the path forward.” In developing countries, that often takes the form of subsidies for fossil fuels.
Here in the U.S., where “elected officials spend an average of four to five hours every day … begging rich people for money,” entrenched interests have far too much influence, he says. “To solve the climate crisis, we do have to spend time solving the democracy crisis.”
But this movement for a sustainable economy is “in the tradition of the civil rights movement and other great movements,” Gore says. “Every great moral challenge confronted by humanity has been met with a series of nos. But the great poet Wallace Stevens once wrote, ‘After the final no there comes a yes / And on that yes the future world depends.’”
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