Climate change in the time of corona: That’s so 2019…

Photo by Markus Spiske on Unsplash

Social media extravaganza

To stay productive these days I try not to spend too much time on social media…I’m failing miserably of course. On Twitter many people are worrying about the Coronavirus (COVID-19), blaming others for not doing enough to flatten the curve, or sharing videos of epic Zoom blunders. LinkedIn is used to praise our lackluster attempts to do online meetings and showcase corporate initiatives that ease some of the pain. On Facebook we fuel our friends with nostalgia, sharing memories of when we could still go outside. It is annoyingly sunny these days in the UK. And TikTok? TikTok shows us how to master new dance routines when in self-isolation. In our family, we are thinking about having a go at the arm-flinging Renegade routine or perhaps the floating feet of the Ride It dance. We might need a long period of quarantine though for this to be successful…we have other talents!

Why won’t you listen to us?

But what has our community of sustainability scholars to add in times of crisis? We’re frustrated. And we vent this frustration on Twitter. Why do people listen now and take bold action while the same is oh so necessary for sustainability and climate change as well? The explanation is quite obvious. The coronavirus affects us now, it impacts people close to us, and it is a matter of life and death. Most sustainability events are more psychologically distant. The impacts will take place sometime into the future, what impacts will look like remains uncertain, and when they are more immediate, they tend to take place far away and affect others, not us. Clearly most of us will disagree with this analysis. People just don’t understand climate change well enough to realize that it’s already being disruptive to our society and environment.

Us and them

Still, many people also see the coronavirus as something that won’t affect them. The young and fit won’t suffer as much is a widely held idea. There are generational and societal fault lines here, pitting the young against the old; the rich against the poor; and the worried ones against those who just want to live their life to the max and party. Yet, these fault lines are not always the same as with climate change. While the young blame the old for causing climate change, the old now worry the young are not taking the coronavirus seriously. A fundamental difference is the much broader basis for support to take bold action on the coronavirus. While decision makers think twice before making any sacrifice to economic growth when they announce climate change measures, with corona they show no hesitation at all. Only in some [unnamed] countries there is still some debate about what is more harmful to the economy, the virus or the measures to stop it from escalating.

Emotions or rational decision making?

Bold measures might simply be an act of rational decision making, not taking action now will only lead to worse outcomes in a few weeks’ time. However, emotions also seem to play a role in the decision-making process. For many leaders the fear of going into the history books as being the ones that failed to issue a lockdown, and do what is necessary, clearly overrides worries about economic growth. But there is also the fear of losing the next elections. With corona, we’ll know soon enough if the measures were adequate. If not, our politicians will be held accountable. With climate change we keep groping in the dark about who we should blame. The media are pulling the wool over our eyes by reporting on so many alternative causes for extreme events, such as the recent fires in Australia and the Amazon and the floods in the UK, that we seem to forgive our politicians more easily.  

Will we rethink our economic system after the corona crisis?

Will the coronavirus change how we think about climate change? I’m not so optimistic. There will be major impacts for specific sectors such as airlines, the market street, and the self-employed. Many businesses won’t survive. This might lead to a dip in carbon emissions but the voids they leave will be filled quite quickly by others. For most other sectors, I’m afraid that it will be a return to business as usual. The economic downturn might well be a reason to park climate change again as an issue we’ll deal with later. The last financial crisis showed us as much. Is it all doom and gloom then? Is there no silver lining? I do hope and expect that some of our new routines will stick. We now know that it is really not that difficult to reduce our business travel. We finally forced ourselves to explore the exciting world of online teaching and meetings. We have invested in the infrastructure and hopefully we will keep using it. Still, I’m not so sure that the coronavirus will turn out being the game changer for climate change that we might be hoping for. If social media shows us one thing then it is that trends are quite short-lived. Climate change now already sounds so 2019… 

Why businesses underestimate the need to adapt to extreme climate events

Professor Jonatan Pinkse, Executive Director of the Manchester Institute of Innovation Research at Alliance Manchester Business School, The University of Manchester.

This article is written as part of #CoveringClimateNow – a global collaboration of more than 250 news outlets to strengthen coverage of the climate emergency.

What the Stern Report did in 2006 for climate mitigation and the need to reduce carbon emissions, former UN Secretary General Ban Ki-moon now tries to do for climate adaptation: Show the numbers! This week, the Global Commission on Adaptation that Ban Ki-moon founded together with Bill Gates and Kristalina Georgieva of the World Bank, published its Adapt Now report, stating that investing $1.8 trillion in climate adaptation now will lead to a total of up to up to $7.1 trillion in net benefits. The message is clear, investing in climate adaptation to better cope with extreme weather and rising sea levels makes economic sense. But why are we not doing it then?

The climate emergency might be grabbing the headlines, lots of confusion remains about terms like mitigation and adaptation and the difference between them. People have always felt uncomfortable to admit the need for adaptation, as it could be seen as no longer trying to push for mitigation and reduce carbon emissions. Still, while the climate policy has long discussed mitigation and adaptation both as necessary responses, the business world has been much slower to acknowledge adaptation as a strategy to tackle climate change.

Adaptation is a confusing concept for business. Often, when managers talk about how they do adaptation, they will explain how they are improving their carbon footprint. But this is mitigation. And when you explain what we mean by adaptation, every manager will tell you that their business is always adapting to changes in the environment, also those related to weather and climate. Food producers, insurance companies, they all monitor weather patterns and analyze how any changes might affect their assets. It is part of business-as-usual.

Our research shows that the business-as-usual mindset could be a mistake. It leads businesses to underestimate the out-of-the-ordinary of climate disruptions and the need to radically change business practices to be resilient when experiencing extreme weather events. Studying oil firm responses to the Carbon Disclosure Project on climate adaptation, we found that oil firms have the tendency to see climate signals as nothing new. They don’t see a need to change their business practices because they feel prepared. Many climate signals are just considered part-and-parcel of operating under extreme conditions such as in the Arctic. We found a similar dynamic when Shell openly responded to critique via a public Webchat on arctic drilling. Shell engineers were convinced that they could handle the extreme conditions and there was no additional risk. Still, in 2015 Shell abandoned its plans to drill in the Arctic, apparently due to the disappointing discovery of oil and gas.

Why do firms underestimate the importance of climate signals and fail to see the need for a radical overhaul of their operations? We found that it has much to do with how they process climate-related information in their business. The people responsible tend to suffer from selective attention. They only notice certain signals related to climate change while ignoring others. Much of what they see as climate change depends on the source of information they consult. The IPPC reports, for example, might raise awareness but they lack the specificity needed for business to understand how climate disruptions them. The selective attention also leads to a focus on current activities only, discarding long-term developments.

What was most surprising, maybe, is that firms with well-developed risk management systems and those that frequently experience extreme weather are more likely to underestimate the need for climate adaptation. Paradoxically, being prepared now might leave them underprepared in the long run. Their risk management systems are typically based on past experiences. But, as with financial markets, past experiences do not form a guarantee for developments in the future. By relying so much on the past, firms might fail to see the need for radical measures to deal with the unexpected. The major problem of climate adaptation is that we don’t yet know what nature will throw at us, there is so much uncertainty. Businesses that seem well-prepared might therefore very well be the ones taken by surprise as well. Even if, deep down, they know radical change is necessary, they act as if current measures are sufficient. A change in mindset seems long overdue.

Recent mentions in newspapers and magazines

Over the past few months, I have contributed to several newspapers and magazines on the topics of climate change, sustainability and green mobility.

For the Telegraph, I commented on the most recent report of the Committee on Climate Change (CCC) on how to create a net-zero economy: How UK businesses can be ready for climate change

For the Financial Times, I wrote a piece – Climate change isn’t just a boardroom issue, it’s a market concern – in which I explain why business hesitates to take action on climate change. The insights are based on our article on climate inaction, published in Business & Society.

I made a similar argument in Management Today – The main excuses businesses give for climate change inaction – explaining what the reasons are behind the apparent inaction of business on climate change.

I was featured in a piece for Director magazine, on the Future of business motoring. Here I give my views on the future of green mobility such as electric vehicles.

A Framework to Understand the Sharing Economy

by Aurélien Acquier, Thibault Daudigeos, and Jonatan Pinkse

The sharing economy encompasses an immense range of actors, including everything from major economic players (e.g., Airbnb and Uber) to local community-based initiatives (e.g., repair cafés or fablabs). With such a variety of players, it is difficult to clearly understand the sharing economy. In response, our article Promises and paradoxes of the sharing economy: An organizing framework, published in Technological Forecasting and Social Change, provides a framework to more easily categorize and analyze the nascent, yet booming sharing economy. Sharing as an economic activity is an age-old practice (bartering and lending). However, the current ‘sharing economy’ has grown exponentially thanks to the power of digital technology. While the term is very à la mode, there is no clear definition of a sharing economy initiative.

Is the sharing economy positive?

The term ‘sharing’ already creates an interesting question as ‘to share’ generally has a positive connotation. Yet, as exemplified by debates concerning Uber and Airbnb, the nature of the ‘sharing economy’ can sometimes be viewed negatively. We highlight that the use of the term ‘sharing’ can create a ‘feel good story’ that overlooks the darker sides of this new economy.

3 concepts to understand the sharing economy

To facilitate further discussion and analysis of the sharing economy, we suggest three concepts: (1) access economy, (2) platform economy, and (3) community-based economy.

The access economy includes initiatives that aim to share underutilized assets. Initiatives in this category tend to have two broad promises: first, to provide cheaper and wider access to services or products without requiring ownership; and second, to promote a sustainable solution for more intensive use of the capital ‘trapped’ in products.

The platform economy encompasses initiatives that focus on decentralized exchanges through digital platforms. In addition to promising broader access and resource optimization, these initiatives include secure exchange systems and promote individual economic opportunities.

The community-based economy includes initiatives built around non-contractual, non-hierarchical or non-monetized forms of exchange for products or services. These initiatives promote inclusiveness and social bonding within the community as a solution to overcome problems with traditional markets and bureaucracies.

We explain that most sharing economy initiatives can be categorized as a mix of two concepts. For example, fablabs and repair cafés would qualify as community-based access initiatives (i.e., they encourage local solidarity while promising wider access to particular equipment and know-how). Access platform initiatives include the likes of Airbnb and Blablacar. Community-based platform initiatives include examples such as Citiz, a national French network of local car-sharing companies.

Key points

  • Although the sharing economy is booming because of digital technology, it is still too young to be clearly defined.
  • Three concepts (access, platform and community-based economy) can help actors understand and categorize initiatives in the sharing economy.
  • Maintaining a broad perspective on the sharing economy can help actors understand both positive and negative aspects of this evolution.

The research has been carried out as a collaboration between Aurélien Acquier (ESCP Europe, Paris, France), Thibault Daudigeos (Grenoble Ecole de Management, Grenoble, France) and Jonatan Pinkse (Alliance Manchester Business School, Manchester, UK).

Links: https://www.sciencedirect.com/science/article/pii/S0040162517309101?via=ihubhttps://www.researchgate.net/publication/318603405_Promises_and_paradoxes_of_the_sharing_economy_An_organizing_framework

Green fuels – has the tide already turned?

By Professor Jonatan Pinkse

The opportunity to advance the development and prevalence of alternatively-fuelled vehicles (AFVs) has never been greater than it is now. Though technologies such as electrically-powered vehicles are not necessarily new, this is the first time that AFVs have received such a great deal of support across the board.

In addition to positive incentives such as subsidies, a significant window of opportunity has opened due to the Government’s increasing focus on policies designed to gradually phase out vehicles with an internal combustion engine.

The future of diesel cars in particular is looking increasingly uncertain, with its toxicity put into sharp focus by the recent Volkswagen scandal, where the company cheated emissions tests and covered up dangerously high levels of pollution. Moves by the Government, such as its intention to ban the sale of petrol and diesel cars by 2040, have also dampened public opinion of the fuel.

It is not just the UK that is beginning to take action, either. France is mirroring the UK’s own target, with a ban to take effect from 2040 – except in Paris, which has brought its target forward to 2030. Similarly, Copenhagen plans to ban all diesel cars as early as 2019.

The bad press for traditional fuels underlines the tremendous opportunity for AFVs to rise in popularity, and their potential to overhaul existing car fleets.

There are drawbacks, such as lingering technological barriers, the limited range of electric vehicles or the current lack of charging infrastructure, for example.

However, the advantages even now far outweigh the disadvantages. My own research has demonstrated that providers of AFVs can begin to overcome many of the initial barriers to adoption by innovating their business models, and particularly their value proposition. Rather than just offering vehicles as a product, the introduction of AFVs allows firms to provide new solutions for mobility in a much broader sense, championing mobility as a service.

Recognising the potential of AFVs as a key component of business strategy, rather than just a method of greening fleets, will be crucial for businesses as we move towards the scrapping of internal combustion engines. With the emergence of innovations such as vehicle-to-everything (V2X) and other connecting technologies, AFVs should not be seen merely as a means of reducing pollution and mitigating climate change – important as this may be. In reality, they are helping in the journey towards making all vehicles smarter and safer.

The key here is that in doing so, businesses will be able to change consumer perceptions of such technol¬ogies, demonstrating their value as a green service and simultaneously overcoming the problems inherent with new, disruptive technologies.

This is an exciting moment for AFVs. We are only seeing the tip of the iceberg in terms of the innovation and benefits they are set to bring to businesses and consumers alike in the future.

Professor Jonatan Pinkse’s analysis of the rise of alternatively-fuelled vehicles is featured in the Hitachi Capital UK Future of Fuels report, found here.

Bringing Disruptive Technologies to the Masses: Innovate Your Value Proposition!

Innovation is more important than ever for firms to be competitive. However, while in the past product and process innovations were seen as key ingredients, nowadays business model innovation is considered to be crucial as well. Research from IBM shows for example that firms investing in business model innovation have significantly higher growth in their operating margin than firms focusing on process or product innovation. While the importance of business model innovation is widely acknowledged and not new per se, it is not yet clear why this form of innovation seems to drive competitiveness so much. Leading management scholars have argued that one of the main reasons for business model innovation’s strong competitive impact is that it centres on the links a firm creates between what technologies can deliver and how customers use them. If a firm manages to build unique links between key technologies and the way customers see these technologies creating value for them, the more the firm will thrive in the market. But how do firms create such links?

The key element of a business model that builds this link between technologies and customers is the value proposition: a firm’s promise or offering to the customer. The value proposition forms the linking pin between what a firm can offer technologically and what a customer is looking to get done. But innovating a value proposition is not easy because customers tend to have clear expectations of what the firms that they like so much should offer. Customers don’t necessarily like surprises. What if a well-respected firm is changing course because it wants to launch a new and potentially disruptive technology. Will customers accept this? Making a disruptive technology’s value proposition attractive for mainstream customers is very challenging.

We – René Bohnsack from Catolica-Lisbon and Jonatan Pinkse from Alliance Manchester Business School –set out to study how firms innovate value propositions for disruptive technologies and how successful they are in doing so. We chose car firms that were offering the disruptive technology of electric vehicles in the US and the Netherlands as a context to study value proposition innovation. Customers are typically very conservative in their choice for cars, so making electric vehicles attractive has proven to be very difficult indeed. Our results, which have been published in the August issue of California Management Review, were revealing.

We found three different tactics car firms use to innovate their value proposition to make disruptive technologies attractive to mainstream customers. Firms either enhance a technology’s unique advantages, they try to compensate for the technology’s disadvantages, or they ‘couple’ the technology with previously unconnected markets to tap into new sources of value. Our findings suggest that many firms only focused on trying to overcome a disruptive technology’s disadvantages by compensating for these by offering additional services. It was quite surprising that most firms rather relied on compensating disadvantages than on stressing or enhancing the novel aspects of a technology. This was especially the case for traditional car firms such as General Motors and Volkswagen who not yet seemed to fully grasp the full value that electric vehicles could offer to customers. However, those firms focussing on enhancing the technology’s unique advantages were more successful in the commercialization of their product than firms that were only compensating. Only Tesla and BMW really focused on the novel aspects of electric vehicles and had much more successful value propositions as a result. Only very few firms tried to couple their technology to new markets but this might be due to the early stages of that electric vehicle industry finds itself in.

Based on our findings we developed a value proposition reconfiguration framework allowing managers to increase the attractiveness of disruptive technologies in a cost-efficient way and to increase sales. Firms can use the framework to change their value propositions so that disruptive technologies become more attractive. The method helps managers to disentangle all the different features of a technology to see how they should repackage each feature in a novel value proposition by using a combination of compensating, enhancing and coupling tactics.

For the full paper see the website of California Management Review or refer to ResearchGate.

Alliance Manchester Business School Spotlight on Jonatan Pinkse

Tell us a little bit about yourself and your professional background:

“I’m from the Netherlands and I attended the University of Amsterdam where I studied my undergraduate and postgraduate degrees in the field of economics. Whilst there I branched out into the topic of environmental sustainability and this is now the driver for my research.

“My PhD looked at the issues of climate change, green energy and renewable energy. This led me to Grenoble Ecole de Management where I was an associate professor looking at economics and management.  By working and researching in the innovation community, this led me to MIOIR here in Manchester. My research is about looking at different topics and perspectives on sustainability, such as technological and societal issues.”

The Academy of Management is the biggest organisation of its kind, with 20,000 members and 10,000 participants are expected to attend the Annual Meeting in Atlanta this summer. What is your role in this and how did you get involved?

“I have been active in the Academy’s ONE Division (Organisations and the Natural Environment) for some time and won the Best Dissertation Award in 2006 and the Emerging Scholar Award in 2011. This recognition brought me to the Program Team where I chaired the Doctoral Consortium and also the Professional Development Workshop.

“I was nominated to be the Program Chair for this year by fellow colleagues which is really pleasing but will not be easy. We are expecting more than 7,000 papers and symposia proposals to be submitted for possible presentation during the Annual Meeting as a whole.”

Lastly, what does the future hold both in terms of the Academy and your own research?

“I think we’re at an exciting yet challenging time in modern history where businesses can’t develop without considering their environmental footprint yet at the same time they still have shareholders to keep happy by making a profit. I’m currently looking at what the future of electric vehicles and mobility could look like but again, as this is so new, in two or five years’ time our research now may be completely incorrect – that is the challenge.

“There are emerging social issues around technology which are fascinating, such as the future of television and how we consume this industry. Others include how countries such as the UK are having issues because of obesity – how will food companies enter the debate about sugar? There is lots of uncertainty in all of these subjects but that is what makes it so interesting.”

Source: Greg Holmes for AMBS E-Bulletin

Embracing disruption to stimulate innovation in sustainable energy

A research project led by academics at the Manchester Institute of Innovation Research will provide insight into how firms in the European energy sector can transform their business by embracing disruptive innovations.

In recent years large electric utilities have been forced to rethink their business models in order to cope with the societal challenges of climate change, and also because of the backlash from the Fukushima nuclear disaster of 2011. For instance in the wake of the disaster Germany announced it would close all its nuclear plants by 2022.

Disruption

Professor Jonatan Pinkse from the Institute says because of the disruption caused by sustainable energy innovations in the area of renewables and smart grids utilities have been forced to embrace innovations they have so far resisted.

“Utilities face the dilemma that they know they have to change their business model, but do not know how. The ‘old’ model where utilities focus on electricity production and sell as much electricity as possible is now considered unsustainable. Instead there is an increasing need for utilities to design a ‘new’ model that goes beyond electricity production and moves towards service provision.”

He said there was a major challenge for electric utilities to redesign their business from the inside and that they were increasingly looking across their organisational boundaries for help. “This project creates insight into how European utilities change their collaborative behaviour to be able to tap into new sources of value creation built on sustainable energy innovations.”

Ecosystem

The project, which is funded by the Lord Alliance Foundation, takes a business ecosystem perspective by studying the change in dynamics of utilities’ strategic alliances with new partners active in the field of sustainable energy.

Adds Jonatan: “Focusing on the emergence of new business ecosystems the project aims to examine the questions of ‘who is doing what?’ and ‘who is profiting most?’ This ecosystem approach will not only reveal the actors involved, the inter-firm division of activities and resources, and the allocation of costs and revenues, but also why some actors capture a greater share of the value than others. The analysis will show under which conditions certain actors seem able to shape the business ecosystem to their advantage, while others fail to do this.”

The project, Sustainable Energy Innovation and Shifts in Value Creation and Capture in the Business Ecosystem, is being headed by Jonatan and Dr Eva Niesten.

Source: http://www.mbs.ac.uk/news/school-news/embracing-innovation/