Tag: #climatechange

Environmentally sound and financially rewarding? Key findings from an exploratory study on the Science Based Targets Initiative (SBTi)

By Milena Bar, Ottilia Henningsson, & Dr. Kristjan Jespersen

◦ 5 min read ◦

The Science-Based Targets initiative aligns firms’ emission reduction targets with a net-zero emissions pathway. Firm commitment yields significant abnormal returns which are larger for firms committed to larger emission reductions and for high-emitting firms. 

The IPCC’s sixth assessment established a code red for humanity and provided mounting evidence of widespread, rapid, and intensifying climate change. The Paris Agreement, ratified by over 190 states and non-state actors in 2015, formally stipulated the goals of limiting global warming to ideally 1.5°C and at a minimum well below 2°C with the aim of reducing the most catastrophic damages related to climate change onto the natural environment, human health and global financial market. The need for climate action is urgent and requires engagement from governments, individuals as well as corporate and investor participation.

Combatting climate change requires voluntary private sector engagement

Incentivizing corporations and investors to act voluntarily on climate change is critical to redirect private capital towards environmentally responsible business practices. The Science Based Targets initiative (SBTi) is becoming the global standard for firms seeking to set emission reduction targets aligned with the required global decarbonization targets established in the Paris Agreement. By encouraging voluntary corporate carbon emission reductions, the SBTi is a critical tool to reduce the private sector’s reliance on fossil fuels. 

2021 record year for new approved targets and committing firms for SBTi

Since its founding, just seven years ago, SBTi has experienced exponential growth in the number of committing firms and has mobilized firms representing more than a third of global market capitalization to reduce their carbon emissions. In 2021 the initiative took steps to increase the ambition level of firms’ emission reduction targets. When first established, firms could commit to reduce their emissions either aligned with the reduction targets of 1.5°C or 2°C. However, from summer 2022, the initiative will only be accepting the more ambitious emission reduction target, as set out in their campaign Business Ambition for 1.5°C.

Since company engagement ultimately comes down to whether committing to SBTi will drive wealth for shareholders, understanding the stock market response to firm commitment to the SBTi is essential not only for businesses looking to commit, but also for investors. To justify the integration of a climate credential such as the SBTi in investment management, it needs to be able to provide excess returns. To understand the stock market reaction to firms’ announcement of SBTi commitment, we conducted a short-horizon event study on a portfolio of 1.535 firms.

Firm commitment to the Science Based Targets initiative aligns environmentally sound practices with financial viability 

Firm commitment to the SBTi indeed yields a positive announcement abnormal return and thus speaks to the credibility of SBTi in constituting a credible signal of firm commitment to sustainable business practices. Even more encouraging is the finding that firms committed to the 1.5°C target experienced substantially higher returns, indicating a stronger positive market reaction when exhibiting a higher cost of commitment and higher target ambition level. The market evidently differentiates between ambition levels by rewarding businesses that are pledging themselves to more demanding emission reductions and a more climate-friendly business strategy. These findings are particularly relevant in light of the SBTi making the more stringent emission reduction target the new standard for all firms via their campaign Business Ambition for 1.5°C and may encourage more firms to increase their efforts in reducing their greenhouse gas emissions.

Stock price reaction in response to commitment to the Science Based Target initiative

In turn, high carbon emitting firms, proxied here by firms identified by the CA100+ list, reaped the largest reward in their stock price following commitment. This finding further confirms the market’s more sensitive reaction to costlier commitments, but also creates concern about whether the SBTi may have to rethink a recent strategic decision. The SBTi announced that they will not be accepting targets set by firms operating in the Oil and Gas industry, thus abandoning the industry specific methodology for fossil fuel firms which had been in development for several years. Fossil fuel firms have a key role to play in successfully achieving the goals of the Paris Agreement, thus begging the question of whether the SBTi is not missing out on covering an industry critical to combatting climate change and a sector of firms who are highly rewarded by the market for committing to reduce their emissions. 

As climate disasters become more prevalent and more severe, firms who fail to transition to a low, or zero, carbon business model can be expected to become more vulnerable in the long run. To expand the analysis, we further tested the performance of a portfolio strategy screened for firms committed to the SBTi. Despite the underperformance of an SBTi screened portfolio against a portfolio consisting of only non-committed firms in the medium-term, there is reason to believe that a portfolio with SBTi committed firms may provide higher returns in the future. Given that SBTi commitment represents a commitment to aligning the firm’s operations with the net-zero emissions pathway, it can be perceived as a safer bet in the long run. Moreover, portfolios consisting of SBTi firms were shown to be characterized by lower volatility. The objective of investors is shifting to increasingly sustainable and impact focused investment profiles, hence portfolio and asset managers may use SBTi commitment as a filter in security selection to achieve their client’s demand.

Looking Ahead

Financial institutions have a key role to play in driving systematic economic transformation towards a global net-zero carbon emissions economy in their power to lend and invest. As evidenced, firm commitment, ambition level and cost of commitment are reflected in the stock’s pricing mechanism, making the business case for the firm to set ambitious targets for decarbonization, and providing rationale for investors to in the short run utilize the market’s reaction to firm commitment in investment processes and strategies. 

About the Authors

Milena Bär is a recent graduate in MSc Applied Economics and Finance and is working as a student researcher in ESG and Sustainable Investments at Copenhagen Business School. Her research projects are mainly within the field of ESG metrics and regulation, with a focus on the investor’s side.

Ottilia Henningsson recently graduated with a MSc in Applied Economics and Finance from Copenhagen Business School with a keen interest in the transition towards a more sustainable financial industry. 

Kristjan Jespersen is an Associate Professor at the Copenhagen Business School. He studies on the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance.

Photo by Matthias Heyde on Unsplash

No Trees, No Future: How can we unlock the full potential of conservation finance?

By Dr. Kristjan Jespersen, Dr. Izabela Delabre, Dr. Caleb Gallemore, and Dr. Katryn Pasaribu

◦ 3 min read ◦

Tropical deforestation continues at alarming rates, with 12 million hectares of tropical tree cover loss recorded in 2018. Much of this deforestation is linked to large-scale agricultural development. Palm oil companies are seen as key deforestation culprits due to high-profile media campaigns being led by NGOs and, in response, recent years have seen the proliferation of private sector pledges and initiatives to address deforestation in the palm oil value chain. There has also been growing international focus on forest conservation in the context of climate mitigation, with countries at 2021’s United Nations Climate Change Conference (COP26) pledging to halt deforestation by 2030. Multi-billion dollar initiatives, such as the Bezos Earth Fund are investing in nature-based solutions to address climate change, including through the protection and reforestation of forests and other ecosystems. 

Given these ambitions, an important question for corporate sustainability and conservation research and practice is how to link financing mechanisms for conservation and value chains, two policy streams that are generally disconnected. Actual methodologies for understanding appropriate, long-term financing for forest conservation remain elusive, and this knowledge gap hinders the clear assignment of responsibility, accountability and sustainability of conservation efforts.

Articulating “conservation finance” (the “mechanisms and strategies that generate, manage, and deploy financial resources and align incentives to achieve nature conservation outcomes”) with value chains could help align incentives between actors and facilitate increased financial flows from the private sector to conservation. 

Introducing No Trees, No Future – new research project

An ambitious new research project “No Trees, No Future – Unlocking the full potential of conservation finance”, funded by the David and Lucile Packard Foundation, seeks to design and test a rigorous methodology for understanding the responsibility for conservation finance of influential firms in the palm oil value chain. It addresses important knowledge gaps that currently impede effective conservation finance, examining questions such as: Which firms are responsible for financing conservation? What are the motivations of firms to engage in different types of conservation finance initiatives? To what extent are companies willing to internalize conservation costs? What might cost-sharing models look like? 

This novel, interdisciplinary research project uses a mixed-methods design that combines in-depth case studies, surveys and remote sensing to explore how the costs of conservation may be shared effectively and equitably between palm oil value chain actors, and provides a resource for external stakeholders seeking to identify firms’ contributions to land cover change, in Indonesia to start with.

The research will involve the development of data-intensive methods to assess the spatial footprint of the supply chains of a set of lead firms in the oil palm value chain, as well as in-depth interviewing of stakeholders across the palm oil value chain to identify the feasibility and possible impacts of adopting new methods for conservation finance. 

Our goals are: (1) to develop a methodology that can be readily applied to estimate lead firms’ responsibility for contributing to conservation finance in the palm oil sector, and (2) that business models and strategies integrate conservation finance effectively, supporting more equitable cost sharing. 

The research will identify several possible models for assessing spatial footprints of firms’ supply chains in the oil palm sector, testing their feasibility with a selected group of investors and conservation project proponents. Following this initial project, which focuses on the palm oil value chain, we intend to explore possibilities in other commodity sectors, and how to scale up efforts to support effective and equitable conservation finance.

To what extent will companies be willing to absorb the costs of conservation finance into their supply chain transactions? How might potential barriers be overcome? It is our intention that the project contributes to companies taking on greater responsibility for conservation finance, embedding long-term conservation costs into the palm oil value chain (that are currently externalized), disrupting ‘business as usual’ to support forest conservation, given their critical role in climate mitigation and biodiversity conservation. 

We will share our interim findings on this blog as the project progresses. We would be delighted to hear from researchers from different disciplines and practitioners working in this field. If you have any questions or comments, please get in touch! 

About the Authors

The two-year project is led by Dr. Kristjan Jespersen, Associate Professor at the Copenhagen Business School (CBS). The research team includes Dr. Izabela Delabre, Lecturer in Environmental Geography at Birkbeck, University of London; Dr. Caleb Gallemore, Assistant Professor in the International Affairs Program at LaFayette College, Pennsylvania; and Dr. Katryn Pasaribu, seconded from Universitas Prasetiya Mulya to CBS.

Photo by Franz Schäfer on Unsplash

Lobbying as if it mattered

By Dieter Zinnbauer

◦ 6 min read ◦

The corporate political activities of a business – let’s call them “lobbying” as a shorthand, although they comprise much more from public relations to political spending to sponsorship of thinktanks etc – have long played a rather minor role in discussions on corporate responsibilities. 

And this relative insignificance also converted into rather minimalist expectations about what responsible lobbying should look like: stay within the bounds of the law (i.e. in some jurisdictions, file some lobbying reports and do not hand out bribes); don’t lie egregiously, although puffery and other tricks of the trade are acceptable; and as some scholars in business ethics would cautiously add: don’t do anything that excludes others from contributing to the democratic discourse in an informed manner. 

In many ways this anodyne conception of responsible lobbying mirrors the equally thin conception of corporate responsibilities under the old shareholder-first-and-only paradigm that started and stopped with making profit bounded by legal compliance as the primary responsibility for business.

A growing mismatch

Such a close alignment is hardly surprising.  Yet while the broader expectations for corporate responsibility have substantively evolved and expanded since then, no such trajectory can be discerned for corporate political responsibilities. The former moved from negative responsibilities of don’t be evil to a growing set of capacious positive obligations of how companies ought to treat their various stakeholders and the environment. The latter – expectations for what constitutes responsible lobbying – appeared to largely remain stuck with this minimalist canon of obligations outlined above. True there have been some improvement at the margins, more reporting on political spending and lobbying and more ad-hoc pressure for taking sides on a small segment of social issues in some jurisdictions.  

But despite the best efforts of a small, dedicated band of good governance advocates the scope and urgency of public expectations on what responsible lobbying should look like have not budged much and certainly have not grown in line with broader corporate responsibilities. 

Enter the climate emergency

But things have changed dramatically over the last few years. Responsible lobbying is receiving much more attention in the policy debate and in academia and it is increasingly associated with a set of positive corporate obligations and much more stringent boundaries for which tactics are considered illegitimate. As I would argue, there is one principal engine that drives these much higher expectations for what responsible lobbying should entail: the climate crisis, the civilisational challenge to decarbonise the world economy and several dynamics that it has unleashed in the policy arena.

There is a growing recognition, for example, that what companies do in climate politics is at least as important and often more important than what  they do operationally to reduce their own carbon footprint. Then there is the emergence of a rapidly expanding climate governance and corporate accountability ecosystem whose tracking capabilities, incentive levers and accountability mechanisms dwarf anything that is available for governing lobbying in politics more conventionally. Unfortunately, there is not enough space here to elaborate on these and other such drivers. 

From projecting future aspirations to back-casting for present obligations

For the remainder of this blog I would like to suggest and focus on another, perhaps less obvious and more difficult to grasp contributing dynamic: a shifting normative corridor of what is considered responsible lobbying driven by the particular nature of the climate challenge. The argument goes like this:

Ever more precise climate science and the Paris Agreement to do what is necessary to reduce global heating to a 1.5 to 2 degrees rise to at least avert the most catastrophic scenarios provide a clearly defined, time-bound landing zone for policy action. The days of outright climate change denial are thus over. Seeding doubt about the facts of climate change or the decarbonisation goal has thus terminally shifted out of the Overton window of what constitutes acceptable viewpoints and (barely) tolerable public relations messaging. But more interestingly, things have not stopped here. The civilisational urgency of getting to net zero by 2050 leaves only a few years and a very narrow and rapidly narrowing corridor of necessary action options.

To oversimplify just a bit: responding to the climate crisis is by now more of an exercise of back-casting, deriving the necessary public and corporate policy action from what must be achieved, rather than an open-ended experimentation space guided by a rough compass for direction of travel.

We are by now so short of time and so clear-sighted about the science that we basically know what fossil assets must stay in the ground, what infrastructures need to be blitz-scaled etc. This clarity of goal and techno-economic pathway also means that most not-so-good-faith lobbying tactics aimed to stall, distract, or opportunistically suggest some costly detours are much easier to spot and call out – than would be the case if the option space was still more open.  The normal-times policy deliberation on what business could be imagined doing to help us move towards a desirable future has morphed into a policy imperative for what business must and must not do by when to help achieve net zero by 2050.[1]

Attesting to these dynamics, for example are the emergence of reporting frameworks, assessment exercises, shareholder action and CEO commitments that judge or design a company’s lobbying efforts against scientifically derived necessary policy actions for decarbonizing by 2050. But perhaps even more emblematic for the rising expectations for responsible lobbying is the action plan that one of the leading global PR agencies working for fossil fuel interests has been forced to put forward very recently amidst intense public pressure, including from its own employees. Here some excerpts:

  • Put science and facts first. We seek a better-informed public on climate issues so that we enable swift and equitable action. We will ONLY be led by the science and base our work on objective, factual and substantiated data.
  • We will establish and publicize science and values-based criteria for engagement with clients. This goes farther than our principle of not accepting work from those who aim to deny climate change. We will not take on any work that maintains the status quo, or is focused on delaying progress towards a net-zero carbon future. We will support companies that are committed to the Paris Agreement and transparent in reporting their progress in accelerating their transition to net-zero emissions. 
  • Hold ourselves accountable. We hold ourselves and our clients accountable to continual progress, with transparency on results through regular reporting.

A PR maestro engaging in PR spin for managing its own PR crisis? Perhaps. But there are enough concrete actions included that makes it worthwhile to track this and hold the company up to its commitments.  

And such a forced response by a world-leading PR company clearly demonstrates that expectations for responsible lobbying against the backdrop of the climate crisis, have rapidly matured from compliance and do no outright evil to a concrete set of positive obligations against which political footprint of companies and their service providers can be evaluated.

The ingenuity required to get us to net-zero is 20% technical and 80% political of how to incentivize, mobilize for and administer a just, legitimate transition. 

This outmost importance of climate politics and policy-making combined with the outsize role that businesses and their associations play in this space as the best-resourced and most influential interest group, clearly highlight that responsible lobbying as a set of substantive, positive obligations is an essential piece of the puzzle in solving this civilisational challenge. And my bet is that things will not stop here: higher expectations for responsible lobbying on climate issues are likely to lift all boats over time and translate into higher expectations for how business ought to behave in the political sphere more broadly. 

[1] There remain of course a number of important unresolved policy choices with regard to carbon capture, geo-engineering, bridging fuels etc. but the overall option space and available policy pathways are by now much narrower than two decades ago or relative to many other big policy challenges.

About the Author

Dieter Zinnbauer is a Marie-Skłodowska-Curie Fellow at CBS’ Department of Management, Society and Communication. His CBS research focuses on business as political actor in the context of big data, populism and “corporate purpose fatigue”.

Photo by Tania Malréchauffé on Unsplash

Climate Change and Magical Thinking

By Steen Vallentin

◦ 7 min read ◦

COP26, the 26th UN Climate Change Conference, has just ended. It was supposed to be ‘the next big and significant one’: the great follow-up to COP21 five years ago, the outcome of which was the Paris Climate Agreement, the first binding international treaty on climate change. The global urgency regarding climate issues has certainly never been greater. 

Although COP26 has yielded some results and some progress has been made, it has been a disappointment to many, including the iconic and omnipresent Greta Thunberg, who was filmed chanting “you can shove your climate crisis up your a…” along with other demonstrators at a rally in Glasgow – and who summarized the accomplishments of COP26 in three words:

Blah blah blah.    

Looking at the Glasgow Climate Pact and its immediate reception, we are certainly, once again, witnessing a political willingness to attribute considerable significance to (non-binding) declarations of intent regarding (possible) future actions and to the mere mentioning of the 1,5°C temperature increase target and efforts to phase-down (not phase-out) the use of coal power and fossil fuel subsidies.    

In the absence of truly transformational commitments and progress, the espoused political belief in the power of words to move action can seem quite magical at times, indeed reflective of magical thinking. Certainly, there was nothing magical about the moderate public and civil society expectations of progress preceding COP26. We have to look elsewhere for the magic. We have to look inside the established political system, where magical thinking is at play in definitions of climate problems and solutions, and where it, in itself, constitutes a problem worth addressing.

What is Magical Thinking?

To begin with a definition, magical thinking refers to “the idea that you can influence the outcome of specific events by doing something that has no bearing on the circumstances”. It is a well-known phenomenon in the area of human health and disease. Children are known to practice it. 

However, in the area of climate change and sustainability it is the grownups, in particular politicians, that tend to have a proclivity for magic – with the younger generation seeking to expose the deficiency and unrealness of subsequent courses of action.

In relation to sustainability, magical thinking is a matter of believing that certain outcomes – decoupling of economic growth and GHG emissions, a zero carbon economy – can be achieved by means that, although they may have some bearing on circumstances, are insufficient and ultimately unfit for purpose (according to the best available scientific knowledge). 

Ends and Means: Strong and Weak Sustainability

One way to frame this problem, at the most general level, is to distinguish between strong and weak sustainability, as illustrated in the table below. 

– source: developed from Sjåfjell (2018)

While strong sustainability calls for radical and systemic change guided by a biocentric preoccupation with planetary boundaries, non-negotiable ecological limits and safe operating spaces, weak sustainability signifies a more pragmatic and incremental approach to change, maintaining an anthropocentric focus on development as (economic) growth, human needs and intergenerational equity. An important point being that urgent calls for action tend to draw on the repertoire of arguments provided by strong sustainability, whereas most solutions ultimately fall under the heading of weak sustainability. They are not radical, only incremental, and certainly pragmatic. 

The question is whether it is indeed an act of magical thinking to believe that we can accomplish strong sustainability ends by weak sustainability means. In other words, that we can reach the climate targets we need to reach, according to science, by way of incremental, small steps change – holding onto the growth paradigm, the business case and win-win. 

The Magic of Win-Win

Andrew A. King and Kenneth P. Pucker, in a recent piece in Stanford Social Innovation Review, speak of “the costs of magical thinking” in relation to the prevalence of the win-win (or triple-win) mindset and associated terms such as CSV (creating shared value). They talk about “strategies [that] rely on improbable mechanisms, promise implausible outcomes, and boast effectiveness that outstrips available evidence.” Strategies that “inflict harm because they distract the business world and society from making the difficult choices needed to address pressing social and environmental issues”. 

This begs the question: What is located on the other side of win-win? How can we escape its magical allure and the often exaggerated claims made in its name? Unfortunately, King & Pucker do not have much to say about this. They speak only of how: “It is time to turn away from alluring unproven strategies and refocus our efforts on those interventions that have proven effective – such as government regulation”.

It is not a terribly convincing argument. Government regulation in the age of man-made climate change is not so much an escape from win-win as it is an embodiment of win-win – and arguably needs to be. Sustainable development is not only about climate change and climate solutions – the social and economic pillar of sustainability need to be considered alongside the environmental pillar at all times. That is, questions of social justice and of what is economically feasible also need to be addressed.    

The European Green Deal as a Win-Win Scenario

The European Green Deal is, for better or worse, an illustrative example of this. The President of the European Commission, Ursula von der Leyen, has referred to the green transition as ‘Europe’s Man on the Moon Moment’. Nevertheless, the framing of the European Green Deal reads like a textbook case of win-win, and not a very advanced one at that. As you can read on the Green Deal webpage: “Making Europe climate-neutral and protecting our natural habitat will be good for people, planet and economy. No one will be left behind.” The Green Deal is Europe’s new growth strategy, it will help cut emissions while creating new jobs and, again, it will leave no one behind.

Speaking of private businesses, the arguments for going beyond win-win are quite straightforward. There are ethical issues and matters of responsibility that need to be addressed regardless of whether the company can derive any commercial benefit from it. However, in the political realm of multiple and competing interests and policy concerns it is more difficult to escape the clutches of win-win.

Imagine if von der Leyen would have said: “We need to make sacrifices in order for the green transition to happen. We need to slow down growth, it will cost jobs and we cannot guarantee that some people will not be worse off as a result’. It is a virtually unthinkable scenario. Not least because we know that it is the poorest and most vulnerable population groups that are bound to be worse off.   

The Magic of Danish Government Policy

That is to say, government as we know it does not represent a solution to the problem of widespread magical thinking about climate change and sustainability. It is very much part of the problem and there is no apparent escape. Not even for the most advanced nations in Europe. Let us take Denmark as an example. Denmark was just ranked 4th in the 2022 Climate Change Performance Index (CCPI). As the three top spots were left empty to signal that not a single country currently deserves a ‘Very high’ rating, Denmark is supposedly the leading country in the world measured on criteria regarding climate policy, renewable energy, energy use and GHG emissions. 

This is not to say, however, that Danish climate policy is bereft of magic. Quite the contrary. Dan Jørgensen, the Danish Minister for Climate, Energy and Utilities, has become famous for waving his own kind of somewhat oversized magic wand: ‘the hockey stick’. The hockey stick was originally used (by American climatologist and geophysicist Michael E. Mann) to illustrate temperature changes over time and the transition from the Holocene era (the long shaft) to the Anthropocene era (the short blade). There is nothing magical about this science-based graph.

However, the image of the hockey stick has in recent years been appropriated by management consultants and policy makers who are using it to serve instrumental and sometimes magical purposes. In the instrumentalized imagery, the bend between shaft and blade represents the (magical) moment of innovative/technological discovery, an inflection point allowing, ideally, for a transition from a period of inferior – ineffective, unsustainable – solutions (the shaft) to a period of superior solutions (the blade). 

Dan Jørgensen has been widely criticized for his espoused belief in a long shaft (gestation) period, that tends to become longer and longer and is so far marked by a lack of truly groundbreaking results and postponement of difficult decisions (particulary regarding implementation of a CO2 tax). On the one hand, the inflection point is continually moved further and further away. On the other, it is assumed that the magical moment of discovery and transformative change will happen in time for Denmark to be able to deliver on the Paris Climate Agreement and the even more ambitious Danish climate law. 

A concrete example of magic at work in Danish climate policy is the below image from the recent government action plan on green transition. Notice in particular the small miracle that is supposed to happen from 2029-2030, where all the technical reduction potentials on display somehow reach their target of zero. It seems magical. It is certainly not well explained in the action plan how this can come about – or why the reader should find this sort of technical forecast even remotely believable.

The Great Balancing Act: Magic and Reality

There is an upside and a downside to magical thinking and political talk and action that can be said to reflect magical thinking. Today’s magical ideas may turn out to be next year’s (or the next decade’s etc.) realistic solutions or courses of action. Magical thinking blends into notions of aspirational talk and aspirational policymaking, suggesting that lofty goals can help inspire, motivate and accelerate change processes. 

However, the downside is if magical belief in win-win solutions becomes a sort of self-imposed constraint or censorship standing in the way of open and honest discussions about the changes and sacrifices needed to make the green transition happen.

This can exacerbate accusations of greenwashing and create more public cynicism regarding climate policy and the willingness and ability of the political system to act proportionately. Magical ambitions needs to connect with harsh realities.

Further Reading

King, A.A. & Pucker, K.P. (2021). The Dangerous Allure of Win-Win Strategies. Stanford Social Innovation Review, Winter. Online first.  

Sjåfjell, B. (2018). Redefining the Corporation for a Sustainable New Economy. Journal of Law and Society, 45(1), 29-45.

About the Author

Steen Vallentin is Academic Director of the CBS Sustainability Centre and Associate Professor in the Department of Management, Society and Communication at Copenhagen Business School. His research is centered on CSR as a social and political phenomenon in the broadest sense, increasingly with a focus on corporate sustainability, circular economy and business model transformation – along with the politics and aspirational aspects of sustainable development more broadly. 

Heading photo by Kristopher Roller on Unsplash.

Are social media platforms good places to discuss global challenges?

By Daniel Lundgaard

◦ 3 min read ◦

According to a recent analysis by Datareportal, the number of active social media users grew globally by 13.2% from January 2020 to January 2021, which means that as of January 2021, there are 4.2 billion active social media users. With the increasing use of social media, it only makes sense that important discussions are moving to these platforms. This is especially seen during political elections, but social media are also becoming some of the most important platforms to discuss issues such as gender equality, racism, and climate change. However, while we have seen the potentials of social media for raising awareness about these issues, it is still unclear whether social media are suitable platforms for such discussions.

Throughout my research, I investigated the climate change debate on Twitter, and I want to highlight two important patterns that I found, each illustrating some of the potentials and challenges with the use of social media to discuss global challenges. 

The potentials

On the one hand, I found that the debates on social media platforms are characterized by equality and inclusiveness. It is common knowledge that everyone has a voice on social media, and anyone can contribute to a debate, but simply having the opportunity to contribute does not mean that everyone will have an impact.

Interestingly, what I found was that not only can anyone contribute – everyone can have an impact on the debate and affect how issues are discussed.

This both includes users with less than 100 followers and minority voices such as climate change skepticism. Seeing that even smaller users and minority voices can have an impact is particularly interesting on social media, where it has been argued that it is only the “popular” accounts, influencers, or central actors that shape the debate. Naturally, this does not mean that everyone will influence the debate, but it means that anyone can, which I see as an important part of creating a good place for discussing global challenges.  

The challenges

On the other hand, I found that the use of Twitter to discuss climate change rarely included ongoing dialogue.

There is very little exchange of opinions between two participants – instead, participants share their thoughts by engaging in broader conversations, e.g., by using specific hashtags or by mentioning central figures. In other words, what I found was that participants engage with an imagined audience, not directly with others.

Sometimes a discussion unfolds in the replies to a tweet or in the comments to a Facebook post, but the vast majority of contributions to debates about global issues are more about voicing an opinion, e.g., through retweeting, not back-and-forth dialogue between participants. This means that while most participants actively contribute to the debate, there is rarely any direct response to these contributions, which is a critical challenge, as I see some form of back-and-forth exchange of opinions as an integral part of good discussions. 

So, are social media platforms good places for debates about global challenges?

Well, yes and no – and naturally dependent on how you define a “good” debate. The inclusiveness and equality are great, and this is unparalleled compared to offline arenas that are limited by time and space, thus highlighting the potential for social media to empower citizens, both in their role as ordinary citizens and as consumers or activists that challenge corporate behavior. On the other hand, the distinct lack of ongoing, reciprocal exchange of information or dialogue is a critical challenge, highlighting issues with using social media to debate global challenges. This poses an interesting puzzle.

The lack of dialogue suggests that we need to be careful about using social media platforms to discuss global challenges.

Still, the use of social media to discuss global challenges is rapidly growing. Hence, we cannot disregard the importance of social media, but perhaps we can re-think their role in global discussions. 

I suggest that we move away from the expectation that social media platforms, by themselves, cultivate high-quality debates and instead see them as platforms that mainly inform and develop participants’ views. Hence, rather than providing platforms for dialogue, social media contributes to global debates by providing platforms where participants can become informed and better prepared for subsequent discussions – discussions that often unfold outside social media platforms. In other words, while social media, by themselves, are imperfect places for debates about global challenges, their role in informing participants, including both citizens, corporations, and politicians, illustrates that social media are a critical part of a more extensive media system, and we should not disregard their importance in debates about global challenges. 

A word of caution

However, if we accept that social media mainly serves to inform participants, we also have to consider that some potentials can become challenges. Specifically, the equality found in the debate can become a serious issue.

Without the ongoing dialogue, we miss opportunities to contest and challenge disruptive voices such as climate change skepticism.

Hence, while climate change skepticism, in an ideal and high-quality debate, could be beneficial by inspiring others to improve their arguments and refine opinions, the lack of dialogue on social media means that such voices are not contested and are not inspiring others to improve their arguments.

This is even more important with the increasing polarization we see on social media and highlights that if social media mainly serves to inform participants’ views, there is a greater responsibility on us as participants. Specifically, we still need to seek out these opposing opinions. Even though it might be futile to engage with those opinions, seeking out these opposing views may still inspire us to improve our arguments and, in some cases, even inspire us to refine our own opinions and ideas. 

About the Author

Daniel Lundgaard is a PhD Fellow at the Department of Management, Society and Communication at Copenhagen Business School. His research investigates how communication on social media (e.g. the use of emotions, certain forms of framing or linguistic features) shapes the ways we discuss and think about organizational and societal responsibilities.

Photo by Joshua Hoehne on Unsplash

Connecting, Cohering, and Amplifying: The Work of Transformation Catalysts

By Sandra Waddock and Steve Waddell

◦ 4 min read ◦

The shocking 2021 IPCC report on the climate emergency makes clearer than ever that many human systems are in dire need of significant change. Today’s harsh growth-oriented economic systems are particularly implicated in the growing chorus of demands for purposeful system transformation towards a flourishing world for all. Significant systemic transformation is needed to bring human activities in line with both social and planetary boundaries now being breached. That means that the way we think about economics, how our businesses operate, and even how communities and whole societies operate likely need to change – and radically.  

But transforming such whole systems – economies, societies, communities, even organizations – is incredibly hard. Transformation inherently involves fundamental changes to core aspects of a given system. Things like purposes, values, goals, important assessment metrics, and even the mindsets or paradigms of people in the system must change, whether the system to be transformed is an organization, economy, or society. Our research suggests that a new type of entity – transformation catalysts – may be able to help.

What is a Transformation Catalyst?

A chemical catalyst brings about a chemical reaction without necessarily changing itself. Used in a social sense, a catalyst is a person or thing that makes something new happen or precipitates change. In the spirit of any catalyst, a transformation catalyst works with the mix of different efforts and activities that already exist and that are geared towards significantly changing a system – transformation. When this mix of change efforts, which is usually fragmented with different activities operating in separate silos, is organized, it can become a transformation system. Organized as a transformation system, these activities can be much more effective at producing desired change.

The transformation catalyst’s role is to bring together an array of efforts so that together they can emerge or develop new ways to do their work more effectively – that is, operationalize the transformation system.

We like to say that transformation catalysts connect, cohere, and amplify transformation efforts that are already underway. Four catalytic actions make this coherence and amplification of efforts possible: seeing, sensemaking, connecting, and radical action and learning.

The Four Catalytic Actions

Seeing means helping change agents figure out what their emerging transformation system is all about and who is doing what, where, and how. Seeing involves various forms of stakeholder analysis – figuring out who is in the system, which can use a variety of approaches, including interviews and mapping tools to identify key participants, resources, and system dynamics. Doing so helps participants identify where gaps and possibilities exist to create more effective action.

Sensemaking means creating a shared and coherent vision among various participants to, quite literally, make new sense of their actions and system, and tell new stories about it. These new, more powerful framings can have broad appeal to draw in other participants, raise funds, and create energy moving forward. Sensemaking also means helping participants understand how to pull together into a coherent transformation system so they can act in new ways to take more effective action.

Connecting is the process by which actors learn about each other and begin to devise new ways of acting more coherently together. Connecting involves aggregating, cohering, and, ultimately, amplifying efforts that may already be underway, but have not been as effective as desired to date. Connecting can mean creating a shared set of aspirations and identity and awareness of their own efforts as part of a broader transformation system. Then they can learn from those actions – the radical action and learning process.

Radical action and learning needs a safe space, so that participants in a transformation system can question, explore, analyze assumptions, and experiment with new ways of doing things that are transformative. Experimentation is crucial, since transformation is unpredictable by its very nature. Mistakes will be made, and things will not always work out as planned. Sometimes creating prototypes can be helpful, too, as a kind of testing ground for further action.

Catalyzing Change through 1000 Landscapes for 1 Billion People

One example that we describe in our paper is that of 1000 Landscapes for 1 Billion People. 1000 Landscapes is an initiative creating sustainable solutions by recognizing that long-term sustainability means emerging a shared foundation of land and water resources for all.

In its early stages, 1000 Landscapes consulted with more than two dozen landscape partnerships globally to figure out who was doing what (seeing). They identified what the barriers were to managing landscapes in new ways were (sensemaking).

1000 Landscapes is now building collaborative capacity for holistic landscape management in many different places, starting with an initial group of 20 and growing the number over time (connecting). Holistic land management means, as the initiative states on its website, “integrating action for food, water and health security, sustainable livelihoods, biodiversity conservation, climate action, and the transition to inclusive green economies” (sensemaking).

1000 Landscapes plans to expand to 50 areas in its second phase (amplifying). Its goal is reaching at least 1000 landscapes “meeting locally defined development and environmental goals, with benefits for over one billion people” by 2030 (amplifying and radical action). 1000 Landscapes even uses the language of catalysis to describe its work: “working in radical collaborations with dozens of organizations to catalyze system change”. It thereby “unlock[s] the transformative potential of inclusive landscape partnerships and to scale their impact”.

The Mantra for Transformation Catalysts

The key to understanding transformation catalysts is knowing that they themselves are not doing the actual transformation work. Instead, they are helping to organize other change agents who are already doing that work in new ways so that they can become more effective. Indeed, they are helping them to become effective transformation systems with the potential to overcome the many inertial forces that hold systems in place.

Small, fragmented, individual efforts cannot achieve that type of scale impact. But the potential that transformation catalysts bring is the ability to bring those actors together in new ways. They can help change agents see and understand new, radical possibilities for transformative change if they can act coherently together. Then they can amplify their own efforts by figuring out where the gaps in their transformation efforts are, filling those, sharing resources when appropriate, and acting more effectively.

Connect, cohere, and amplify. That is the mantra for transformation catalysts.

Further Reading

Waddock, S., and S. Waddell (2021). Transformation Catalysts: Weaving Transformational Change for a Flourishing World for All. Cadmus, 4(4), 165-182.

Lee, J.Y. and S. Waddock (2021). How Transformation Catalysts Take Catalytic Action. Sustainability, 13(17), 9813. 

About the Authors

Sandra Waddock is Galligan Chair of Strategy, Carroll School Scholar of Corporate Responsibility, and Professor of Management at Boston College’s Carroll School of Management.

Steve Waddell is founder and co-lead steward of Bounce Beyond, a transformation catalyst oriented to changing towards transforming towards next economies.

Photo by kalei peek on Unsplash

Like oil and water…. Shell’s climate responsibility and human rights

By Kristian Høyer Toft, PhD

◦ 4 min read ◦

In a landmark verdict at the district court in the Hague on 26th May this year, Royal Dutch Shell lost a case to the Dutch branch of ‘Friends of the Earth’, Milleudefensie, and other NGOs. The court ordered Shell to reduce CO2 emissions by 45% by 2030 against a 2019 baseline. The decision breaks new ground for the possibility of holding private corporations accountable for climate change – Shell-shocked and a Black Wednesday for the fossil fuel industry, according to expert commentators in international environmental law.

The verdict emphasizes the international consensus that corporations like Shell must respect basic human rights, such as the rights to life and family life. In the ruling, human rights are seen in the context of climate change and the aspirational 1.5-degree target stated in the Paris Agreement (2015), scientifically supported by the Intergovernmental Panel on Climate Change (IPCC 2018).

The verdict is a significant example of a general surge in climate litigation cases globally in which human rights are invoked.

Holding a fossil fuel company accountable based on the standard of human rights might sound as futile as the effort to mix oil and water.

And this sort of skepticism has roots in the recent history of attempts to connect business, human rights and climate change in what could be seen as a ‘bizarre triangle’ of irreconcilable corners.

However, the Shell verdict can be seen as a firm rebuttal to such skepticism. The court argued that Shell had violated the standard of care implicit in Dutch law. To clarify the content of the standard of care, the court used the United Nations Guiding Principles (UNGPs) which provide a global standard for businesses’ human rights responsibilities. This is, however, a bold interpretation in light of the UNGPs silence on human rights responsibilities with regard to climate change. 

In fact, human rights might not fit so neatly with the difficult case of climate change. Firstly, it is difficult to trace the causal links between the emitters and the victims of climate change, although this is contested by recent studies that have traced two-thirds of historical emissions to the big oil and gas companies, the so-called carbon majors.

Secondly, human rights basically apply only to the state’s duty to protect citizens, and thus only indirectly to private companies. This state-centric approach is core to the human rights regime and tradition, and the UNGPs uphold this by allocating less stringent responsibilities to non-state actors such as corporations.

However, the UNGPs also state that private companies have human rights responsibilities independently of the state. The district court in the Hague reaffirms this in its ruling against Shell, stating that corporate responsibility “exists independently of States’ abilities and/or willingness to fulfil their own human rights obligations, and does not diminish those obligations. [..] Therefore, it is not enough for companies to [..] follow the measures states take; they have an individual responsibility.” (4.4.13). 

A third source of skepticism resides in understandings of environmental law and the central role of the polluter pays principle. Accordingly, emitters are responsible for their historical output of CO2 as enshrined in the United Nations Framework Convention on Climate Change (UNFCCC 1992), but the scope is usually taken to be limited to the unit of production (scope 1), e.g. the refining of crude oil. The standard view of pollution is local, as for instance when a factory pollutes the local river. 

However, in the Shell ruling scopes 1, 2 and 3 are taken into account, meaning that consumers’ incineration also counts and therefore Shell must take responsibility for consumers’ emissions as well. The consequences of including all three scopes incur far-reaching and demanding responsibilities on corporations, where previously the distribution of responsibilities between producers and consumers has been disputed, for instance in the carbon majors case.

In sum, the Shell verdict raises the bar considerably for the expected level of corporate climate responsibility. The verdict also challenges the assumption that human rights don’t fit the complexity of climate change; though in fact the UNs first resolution on human rights and climate change appeared back in 2008. Moreover, the verdict goes against the widespread liberal assumption that businesses’ responsibilities are mainly to comply with the law of national jurisdictions and that consumers are comparably responsible for causing climate change. 

It might be time to rethink such assumptions and not simply continue ‘business as usual’ by seeing climate change and human rights-based climate litigation as a managerial risk factor to be handled instrumentally and in isolation from the moral duty to solve the climate crisis. 

One key lesson could be to acknowledge that corporate responsibilities are not just legal but moral as well, since the distinction is not so clear in soft law instruments like the UNGPs nor even in the notion of human rights themselves, not to mention the moral demands following from the need to respect and realize the targets of the Paris Agreement and related transition paths.

When the Special Representative to the United Nations on Business and Human Rights, John Ruggie, started exploring pathways for developing the field, he was inspired by the American philosopher Iris Marion Young whose ‘social connection model’ of global responsibility in supply chains suggests a forward-looking kind of responsibility for mitigating structural injustices. Young’s notion of responsibility was designed to solve large-scale structural problems like climate change by attributing responsibility to all agents according to their powers, privileges, collective capacities and level of complicity. 

This is the kind of thinking now supported in the court verdict against Shell, and it signals a new beginning where climate change reconfigures how corporations and human rights connect… perhaps making the ‘oil and water’ metaphor obsolete.

Acknowledgements

Among the many expert commentators, Annalisa Savaresi’s work provided particular inspiration for writing the blog. I am grateful to Florian Wettstein, Sara Seck, Marco Grasso, Ann E Mayer and Säde Hormio who all gave comments to my article ‘Climate change as a business and human rights issue’ published in the Business and Human Rights Journal (2020) 5(1), pp. 1-27. The blogpost is based on the approach of this article. Julie Murray was helpful with proofreading.

About the Author

Kristian Høyer Toft, PhD in Political Science, Aarhus University 2003. During 2020-21 a guest researcher at the CBS Sustainability Centre, Copenhagen Business School. His research focuses on corporate moral agency, political theory of the corporation and climate ethics and is published in Business and Human Rights Journal, Energy Research and Social Science, and in the book Corporate Responsibility and Political Philosophy: Exploring the Social Liberal Corporation (Routledge 2020). 

Photo by Irina Babina on Unsplash

Unaccounted Risk: The Case of Sulfur Hexafluoride (SF6) in Offshore Wind Energy

By Esben Holst & Dr. Kristjan Jespersen

◦ 5 min read ◦

Carbon accounting provides a science-based measurement of greenhouse gas (GHG) emissions, achieving greater accountability of companies’ emissions causing global warming. GHGs are reported in CO2 equivalents (CO2e), meaning GHGs with widely different chemical qualities and environmental impact can be presented in a single understandable metric. However, the underlying methodology is debatable. This article questions whether the CO2e of Sulfur Hexafluoride (SF6) is misreported.

What is SF6 and why is it a hurdle for a green energy transition?

SF6 is used as an insulator in a wide variety of electrical equipment, mainly to prevent fires in incidents of short circuits. It is found in transformers inside windmills, offshore and onshore substations, and in power cables.

(Illustration to the left shows a sideview of a windmill turbine – Source: CAT-Engines. Right: an offshore wind energy system – Source: Nordsee One GmbH)

SF6 is a synthetic man-made GHG and cannot be reabsorbed naturally like CO2, meaning once emitted, it does irreversible damage. Most GHGs remain in the atmosphere around 100 years – SF6 remains for 3,200 years. These numbers are given by the Greenhouse Gas Protocol (GGP) based on calculations by the Intergovernmental Panel on Climate Change (IPCC). 

The IPCC’s metric Global Warming Potential (GWP), reveals environmental harm of a given GHG in CO2e. What then, makes SF6 problematic when converted into CO2e? SF6 has a GWP 23,500 times higher than CO2 – a value that is difficult to comprehend. The GWP metric is calculated using a 100-year timeframe based on GHG’s environmental harm. Yet, SF6 has an atmospheric lifetime of 3,200 years, essentially leaving 3,100 years of environmental harm unaccounted for. Using a simple logarithmic function incorporating IPCC data accounting for the missing 3,100 years, the GWP almost doubles. As illustrated below, this indicates how SF6 may be misrepresented in terms of environmental harm in CO2e emissions reporting.

As found by AGAGE – MIT & NASA, other worrying trends are observed. The atmospheric concentration of SF6 has more than doubled in the past 20 years. Luckily, its current concentration in the atmosphere remains low relative to other GHGs such as Methane or Nitrous Oxide.

Source: AGAGE

Regardless, the GWP of these two GHGs pales in comparison to the mindboggling detrimental effect of SF6 on the environment. Emitting this gas should therefore be strictly regulated.

Greenhouse Gas Emissions Reporting – Diverging Approaches

It only takes a little digging into offshore wind energy players to uncover diverging conversion methods of SF6 into CO2 equivalents (CO2e). The GHG emissions reporting methodologies of industry leaders use different emissions factors to convert SF6 into CO2e. An example of underreporting is illustrated by Vattenfall in their 2019 sustainability report, reporting SF6 as 15,000 times more potent than CO2. The emissions factor given by the GGP is 23,500. Ørsted uses a GGP emissions factor for the same gas in their 2019 ESG report. Yet, while Energinet also states it uses the GGP reporting framework in their 2020 CSR report, it uses an emissions factor of 22,800. The ownership distribution between Vattenfall and Ørsted in the Danish wind farm Horns Rev 1 of 40% and 60% respectively, thus blurs accountability and severity of reported emissions. As highlighted by the BBC, atmospheric concentration of SF6 is ten times the reported amount by countries. The IPCC and GGP are also aware of this.

During the past decade…actual SF6 emissions from developed countries are at least twice the reported values. (Fifth Assessment Report of the IPPC)

Measuring Impact of SF6 Leaks by Offshore Wind Players

SF6 emissions will rise exponentially alongside expanding electrified energy infrastructure using equipment containing this gas. This, together with repeated SF6 leaks, perpetuates the worryingly steep upward trend in atmospheric content of SF6 shown above. In 2020, Energinet reported a leak of 763.84kg SF6, or 17,950,240kg CO2e. The environmental impact of this leak is about the same as the emissions of 53 SpaceX rocket launches. Energinet has since admitted to years of underreporting of SF6, leading to amended SF6 emissions related to normal operations doubling.

Leaks of SF6 are too common. In Ørsted’s 2020 ESG report, a major leak at Asnæs Power Station was mentioned without disclosing the actual amount – withholding important risk-related data from investors. However, Energinet disclosed an SF6 leak of 527kg at that same facility in their 2020 CSR report. The leak for which Ørsted is responsible, yet feels is not material to disclose, is therefore potentially around 12,384,500kg CO2e. Indicating light at the end of the tunnel, Vestas has included SF6 on their Restricted Materials list since 2017, as well as introducing a take-back scheme for infrastructure containing this gas – setting a better example for business models of our green energy transition leaders.

Strengthening the Global Response to Climate Change Risk

It is vital that we understand SF6 is so detrimental to fighting climate change beyond 2100 that it has no place in sustainable business models today. Even if CO2 emissions are reduced in alignment with 2100 Paris Agreement goals, reporting in a 100-year timeframe will not save a planet billions of years old. GHG reporting must be better regulated and scrutinised in order to deliver a truly green energy transition. Releasing a gas causing irreversible damage cannot be an acceptable trade-off for a short-term “green” transition. While most company reports claim no alternatives exist, this is not true. Therefore, SF6-free equipment must be mandatorily installed.

A green transition goes beyond 2100, yet poor regulation enables energy companies to present SF6-CO2e favourably by using lower emission factors. Offshore wind energy players have not provided comparable, accountable, and transparent reporting – indicating stricter regulations on GHG reporting are necessary.

The Way Forward: Better Regulation

In 2014, an EU regulation banned the use of SF6 in all applications except energy after lobbyists argued no alternatives exist. The EU acknowledges the environmental harm of SF6, yet EU action has been described as inadequate. Asset managers, institutional and retail investors are exposed to hidden environmental risks related to SF6 in terms of double materiality. Double materiality referring to the financial costs related to management of SF6 incurred once completely banned. Non-financial reporting of GHG emissions and CO2e needs to be regulated far more than current global regulations. Investors, society, and most of all our environment deserves better protection.

NOTE: This article is based on a Copenhagen Business School (CBS) research paper in the course ‘ESG, Sustainable & Impact Investment’ taught by Kristjan Jespersen – Associate Professor at CBS – as part of the newly introduced Minor in ESG. The paper questions the greenness of wind energy by using the case of three large offshore wind energy farms in Denmark: Horns Rev 1 & 2 and Kriegers Flak. The findings are based on ESG, sustainability & annual reports from 2015-2019 of all involved OEMs, manufacturers, operators, and energy grid providers. Implications of the findings point to a coming hurdle within the electrification of a global green energy infrastructure transition. 

About the Authors

Esben Holst, an SDG and CSR research intern at Sustainify, is a Danish-Luxembourgish masters student at Copenhagen Business School. Besides attending the newly introduced Minor in ESG at CBS, his past studies focus on international business in Asia and business development studies.

Kristjan Jespersen is an Associate Professor at the Copenhagen Business School. He studies on the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance.

Photo by Karyatid on Unsplash

Arguing for Climate Adaptation

By Stella Whittaker

◦ 3 min read ◦

This month saw the publication of the Climate Policy Initiative’s (CPI) long awaited analysis of climate finance flows in cities.  Each year the CPI publish an analysis of the global landscape for climate finance but this year that work was supplemented by this urban analysis.  There will also be another forthcoming CPI report  due in April 2021 – State of Cities Climate Finance Report which will help paint the full picture.  

Cities and urban communities across the globe are highly vulnerable to climate change – heat waves, extreme weather volatility, floods, droughts, coastal inundation, and vector borne diseases. The Carbon Disclosure Project (CDP) data indicates that in 2018, 85% of cities reported major climate-related disruptions, including flash and surface flooding and extreme weather events like heat waves and droughts.

There is an urgency for much more discussion, research and attention on climate finance to address climate adaptation needs in cities. While many cities have begun planning policies and programs to build resilience towards climate hazards, the how and where of finance for those activities is less understood.  

It is plain to see from this practitioner-based work that climate finance for adaptation is not being supplied or demanded at a scale that is commensurate with the size of the impacts of climate change.  Scholars have found that here are significant data and reporting challenges and a myriad of policy challenges and barriers.  I am stressing here the need to argue loud and long for adaptation along with mitigation activities.

CPI recorded annual global climate finance flows of USD 546 billion in 2018. Of this only 4% can be attributed to adaptation. Finance flow in cities for adaptation is particularly problematic. The CPI also found:

Between 2010 and 2014, cities received less than 5% (in the range of USD 109 Million) of global adaptation finance.

Morgan Richmond, Nidhi Upadhyaya and Angela Ortega Pastor, CPI, 2021

So, based on current estimates, despite all the difficulties with measurement and tracking, potentially less than 1% of global climate finance is flowing to cities each year for adaptation, which is much less than the USD 11-20 billion that what the World Resources Institute (WRI) stated be needed on an annual basis to protect global urban infrastructure from climate risks (WRI, 2019).

This month I launched a new Linkedin Group Adaptation Finance – this is a discussion, research and professional development group for investors, governments and academics alike dedicated to developing an understanding of climate finance for adaptation. By following the Group there is an opportunity to participate in my PhD climate finance research (survey, interview, focus group or information provision), whilst learning and sharing in the latest research and trends from various industries. As climate adaptation practitioners, investors, governments, academics, scientists and researchers we rarely meet to share knowledge and experiences, please join in this unique collaboration. I want to build an active research environment for both investors and city government focused on climate adaptation. 

In addition, in the Group:

  • WE will analyse climate finance flows in cities.
  • WE will also analyse activity against internationally recognized benchmarks for appropriate urban climate change adaptation financing. 
  • WE will collate innovative climate finance practice.
  • WE will generate new knowledge on how to deliver and finance large-scale innovative city financing solutions through public and/or private stakeholders. 

In Arguing for Adaptation there are five practical things to think about in getting the balance right:

  1. Make climate adaptation an equal priority to climate mitigation
  2. Understand future climate risks to your business and/or constituency (look at the guidance from the Taskforce on Climate-Related Financial Disclosures (TCFD)
  3. Understand climate finance flows in your city and region(s) you operate in
  4. Enter into a dialogue with investors and cities to understand each other’s challenges and opportunities
  5. Look for and prioritize climate initiatives that deliver dual or even multiple benefits – climate resilience, mitigation, natural capital etc. such as nature-based solutions NbS

If you like a good cause and a good argument, then please join me. 

About the Author

Stella Whittaker is a PhD Research Fellow who is undertaking a PhD in climate finance at Copenhagen Business School, at the department of Management, Culture & Communications. Stella is a specialist in the field of sustainability, circular economy and climate change. She has worked for over 30 years as a senior executive in sustainability, climate change, infrastructure sustainability & environment.

Portfolios at risk of Deforestation

How can financial investors better understand underlying risks and act accordingly

By Amanda Wildhaber, Dominik Wingeier, Jessica Brügger, Nico Meier, and Dr. Kristjan Jespersen

◦ 4 min read ◦

Forests play a crucial role in tackling climate change and protecting biodiversity. Around 12 million hectares of tropical forest worldwide were lost in 2018 and approximately 17% of the loss stem from the Amazon alone. The main drivers of deforestations are soy, palm oil, cattle and timber production. As deforestation may harm a company’s reputation, directly affect its supply chains and increase regulatory risks, many institutional investors are concerned about the impact deforestation can have on their portfolio companies.

How can deforestation be measured?

The definition of deforestation risk from an investor’s perspective is difficult to lock-in because different frameworks and approaches focus on different aspects of the risks. The amount of information and the lack of transparency can be overwhelming to financial investors. Therefore, a helpful framework for financial institutions to systematically evaluate the deforestation risk management of portfolio companies has been developed. The framework is divided into two parts, an internal assessment of a company’s commitments and achievements regarding deforestation and an external assessment of outside policies related to deforestation, namely binding laws and private sector initiatives. The framework may serve to complete a scorecard which gives an overview of how well prepared a specific portfolio company is and if it is able to deal with deforestation risks and future regulatory changes. The final scorecard reflects the deforestation risk of financial institution’s portfolio companies.

Is voluntary support sufficient?

Many companies voluntarily support sustainability initiatives and follow zero deforestation commitments (ZDCs) to signal their intention to reduce deforestation associated with the commodities in their supply chain. The reasons behind their commitments include demonstrating corporate social responsibility (CSR), reducing the risk of potential reputational harm and supply chain disruptions. To understand the value of these commitments in mitigating deforestation and associated risks, it is important to critically analyse them in terms of their scope, effectiveness, monitoring and achievements. This includes for example, assessing how companies define deforestation and whether they systematically measure the compliance with their commitments.

External pressure to facilitate internal commitments

It is valuable to see companies implementing robust internal policies and commitments to manage and monitor their deforestation risk. However, it is also important to have external policies in place to hold companies accountable. There are two types of external policies the proposed framework is based on.

  1. The first type are binding laws which apply for portfolio companies and thus represent a regulatory risk. The EU Timber Regulation (EUTR) of 2010, which prohibits the sale of illegally logged wood in the EU, is one example for such a binding law.
  2. The second type are initiatives by third parties, which are of a non-binding nature and complement the binding law. One such initiative is the Roundtable for Sustainable Palm Oil (RSPO), which is an initiative by private companies as well as external parties targeted to eliminate unsustainable palm oil production.
How do the companies score?

Based on the assessment of the two pillars of the framework – internal and external – a scorecard is derived which assists investors to better understand how a portfolio company or a new potential investment is managing its deforestation risk. Answering questions with scores from 1 to 3, whereby 1 is the best score and 3 the worst, the proposed scorecard allows the quantification of the deforestation risk management of a company. While the distinction between 1, 2 or 3 is not always straightforward, the final score gives a tangible assessment of how well a company is positioned to manage its deforestation risks and associated future regulatory changes. The following scorecard provides an overview of the assessment and indicates how well Nestlé is managing deforestation risks.

Having such a scorecard allows investors to manage and mitigate the deforestation risks they face in their portfolios. In addition, the final scorecard enables investment analysts to directly compare potential investments with other companies and can be used as a parameter in the investment process.

The call for action is getting louder

New regulatory requirements, growing public scrutiny and extended private sector initiatives (such as the investor-led initiative Climate Action 100+), mean that it is becoming increasingly important to properly manage deforestation risks. This is also becoming a key concern for financial investors and it is time to think about systematic approaches on how to include deforestation into the investment process. The proposed framework is intended to serve as a starting point for just that. It allows a quantification of deforestation risk and the identification of critical factors. Building the basis upon which investors can engage with companies. This is a first step to support the mitigating of not only financial but also ecological risks.

About the Authors

Amanda Wildhaber is completing her masters in Economics at the University of St. Gallen. She works as a Junior Consultant in the Strategy team of Implement Consulting. Her interest in ESG and sustainable investments developed when she wrote her bachelor thesis on social enterprises in India.

Dominik Wingeier is studying master’s in Banking and Finance at University of St. Gallen. Dominik has been working for BlackRock where he was responsible for executing and monitoring primary, secondary and direct investments in infrastructure projects.

Jessica Brügger is studying master’s in Business Innovation at the University of St. Gallen. Jessica is currently a board member of the Private Equity & Venture Capital Club of the University of St. Gallen and is particularly interested in making the financial industry more attractive to women.

Nico Meier is studying master’s in Accounting an Finance at the University of St. Gallen. Nico has been working at BLR&Partners where he is responsible for private equity investments. Additionally, he has experience providing M&A, ECM and DCM services.

Kristjan Jespersen is an Associate Professor at the Copenhagen Business School. He studies on the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance.

Source: photo by Justus Menke on Unsplash

A Southern-centered perspective on climate change in global value chains?

By Peter Lund-Thomsen

◦ 2 min read ◦

The garment and textile industries account for around 10% of global CO2 emissions, and their fast fashion approach consumes huge amounts of water in production and processing stages. While the fast fashion model incentivizes the overproduction/consumption of clothes, more sustainable solutions lie in the configuration of value chains towards slow fashion (durable products produced on demand) and the introduction of circular business models. Such a transformation will have consequences for the environment, workers’ conditions, and economic development.

This is particularly the case in the light of COVID-19, which led to a temporary disruption in the global garment and textiles value chains as stores closed in Europe and the United States in the spring of 2020. The cancellation and non-payment of garment orders particularly affected suppliers and workers in Bangladesh, leaving hundreds of thousands of workers without jobs and possibly facing destitution. 

This is the focus of a new research and capacity-building project on ‘Climate Change and Global Value Chains’ coordinated by the CBS that has recently been funded by the Danish Development Research Council. In this research project, we will be working with colleagues from the University of Aalborg and Roskilde University in Denmark as well as BRAC University and the University of Dhaka in Bangladesh. Private sector partners include the Danish Ethical Trading Initiative and Danish Fashion and Textile. 

I think that a key challenge in this new project is how we approach ‘climate change’ in the context of global value chains.

In the Danish debate on climate change, it is almost universally accepted that climate change should be at the top of the political and corporate sustainability agendas. However, both employers and workers in the Bangladeshi garment and textile industries may not perceive climate change mitigation as an immediate priority.

First, the purchasing practices of major brands sourcing garments from Bangladesh tend to result in downward price pressures, seasonal fluctuations in demand, and shorter lead times while, at the same time, these brands are also imposing ever greater environmental and labor standard requirements on their suppliers (not only in Bangladesh but elsewhere in the global South). Economic value is very unevenly distributed along the textile/garment value chain, with major brands reaping up to ten times higher economic value than suppliers – and even less reaching workers.

Hence, Bangladeshi suppliers often perceive the environmental and labor requirements of brands as adding to their costs without bringing additional business benefits.

In this context, suppliers may have very few, if any, incentives to address climate concerns in their value chains, while workers in the industry are trying to survive in a context of economic uncertainty.

In my view, a critical aspect of this new project is therefore that we will not only look at climate change from a Northern-centered perspective; that is, we are not only concerned with how brands and factories engage in the process of decarbonization. We will also zoom in on the importance of climate change adaptation, which I would label a more Southern-centered perspective on climate change in global value chains.

In fact, Bangladesh is one of the countries most affected by global climate change whose coastal areas and ports are prone to flooding, resulting in disruptions of the garment/textile value chain and economic losses for local manufacturers and workers.

Moreover, garment factories in greater Dhaka have extremely high lead and CO2 emissions, while many factory workers live in parts of the city that have unhygienic water supplies and must cope with living conditions that affect their health. Hence, integrating climate change and global value chain analysis from a Southern-centered perspective, I would argue, involves looking at the ‘business case’ for climate change adaptation – in other words, we must understand how can climate change adaptation can help in securing the future viability, competitiveness, and jobs in the garment industry and textile industries of Bangladesh. 

About the Author

Peter Lund-Thomsen is Professor at the Department of Management, Society and Communication at Copenhagen Business School. His research focuses on sustainable value chains, industrial clusters, and corporate social responsibility with a regional focus on South Asia.

Do we need to sacrifice to mitigate climate change?

By Laura Krumm

◦ 3 min read ◦

It is not news anymore that a change of consumer behavior is needed in order to have a chance at mitigating climate change. Almost every consumer action today can be quantified in terms of environmental impact. We know that we should opt for the tofu sticks instead of the steak at our neighbor’s barbeque, and we know that we should avoid the all-inclusive vacation to the Caribbean and take a cozy camping trip at Denmark’s beaches instead. What we don’t know is what those behavior changes mean for consumers. What are the consequences for our individual quality of life and well-being?

Self-sacrificing for the planet

The expectation does not seem to be very satisfying. Most of us have heard the word “sacrifice” in the context of environmentally friendly behavior before. The message we receive from climate activists, journalists and researchers is very clear:

We need to change our behavior today to avoid the catastrophic consequences of climate change tomorrow. We need to change our behavior for our children, the animals, other people in other countries, or our own future lives – even if we don’t want to.

We are expected to change our behavior for the greater good, while our own desires have to wait in line [1, 2].

This sacrifice narrative cannot only be found in climate change communication but also in consumers’ minds: When investigating what was hindering consumers to act environmentally friendly when they generally value the environment, the expectation of sacrifice and lowered quality of life was found to be one important factor [3]. Consumers seem to equate environmentally friendly behavior with a loss in quality of life and comfort. This anticipation, among others, prevents them from changing their behaviors and joining in the efforts of mitigating climate change.

Why is this important?

While altruistic motivation – driving us to self-sacrifice for the greater good – is positively related to environmental behavior [4], it can only get us so far. Another main driver of our actions is egoistic motivation. And as it seems, behaving more environmentally friendly is not perceived as a particularly egoistic action. While there sure are people with very strong altruistic motivation who enjoy behaving in a morally right way, many people are egoistic some or most of the time.

If the perspective of an environmentally friendly life is a bleak one, environmental engagement will be limited.

This is not only relevant for individual consumer behavior and environmental engagement, but also for policy and activism. When an environmentally friendly life seems bleak and uncomfortable to many people, it will be a difficult task to get them on board. Why would I support or vote for somebody who wants my life to become worse right now as a tradeoff for a potentially less catastrophic future?

Aside from elections, citizens who equate environmentally friendly behavior with sacrifice and lower well-being may also have lower acceptance of necessary policy interventions aimed at mitigating climate change. Consequently, the necessary change towards more environmentally friendly consumption will be hard to realize without considering its effects on well-being.

Does it have to be sacrifice?

Is it even true that environmentally friendly consumption can be equated with sacrifice, discomfort and a bleak existence?

Contrary to what the public opinion seems to believe, the relationship between well-being and environmentally friendly (or unfriendly) behavior is empirically not yet clear.

Some correlational studies even suggest the opposite: a positive relationship between environmentally friendly behavior and well-being [e.g., 5, 6]. These studies find that people who behave environmentally friendly are more satisfied with their lives. We cannot infer any causality of course – but these findings at least challenge the sacrifice assumption. This means that there may be a discrepancy between consumers’ expectations and the reality of behavior change. The sacrifice assumption might therefore not only be unhelpful in engaging consumers to behave differently, it may even be completely untrue.

What does that mean for us environmental researchers? We need to explore why consumers expect negative consequences of environmental behavior change and how to change that. We need to understand what these negative expectations are exactly. We need to take consumer well-being seriously and keep it in mind when designing behavior change policies and initiatives. And we need to rethink how we communicate about environmental behavior change and climate change mitigation.

References

[1] Kaplan, S., 2000 – Human Nature and Environmentally Responsible Behavior, in: Journal of Social Issues, 56 (3), 491-508.

[2] Prinzing, M., 2020 – Going green is good for you: Why we need to change the way we think about pro-environmental behaviour, in: Ethics, Policy & Environment, 1-18.

[3] Lorenzoni I., Nicholson-Cole, S. and Whitmarsh, L., 2007 – Barriers perceived to engaging with climate change among the UK public and their policy implications, in: Global Environmental Change, 17, 445-459.

[4] De Groot, J.I.M. and Steg, L., 2008 – Value orientations to explain beliefs related to environmental significant behavior, in: Environment and Behavior, 40 (3), 330-354.

[5] Binder, M. and Blankenberg, A., 2017 – Green lifestyles and subjective well-being: More about self-image than actual behavior?, in: Journal of Economic Behavior & Organization, 137, 304-323.

[6] Brown, K. W. and Kasser, T., 2005 – Are psychological and ecological well-being compatible? The role of values, mindfulness, and lifestyle, in: Social Indicators Research, 74, 349-368.

About the Author

Laura Krumm is a PhD fellow at the Department of Management, Society and Communication and a member of the Consumer & Behavioural Insights Group. In her PhD project she explores the intersection of environmental consumer behavior and well-being.

Photo by Markus Spiske on Unsplash

Polarization and polarized opinions – that only happens to other people, right?

By Daniel Lundgaard

Recent developments in politics, especially during the American election, but also within the Danish system, has inspired a lot of talk about how social media is breeding polarization and radicalized opinions. However, from my experience, polarization is often seen as something that only happens to “those people” – often those of opposing views, and as a result, we often fail to recognize that we ourselves might fall victim to the issue of polarization. 

So, with this blog I hope to encourage you to think about how this could be happening to you – and maybe also help you recognize it when it is happening for “those people”, because polarization is a growing problem in our society. 

What is it?

Polarization – it refers to the division of people or opinions into opposing groups, and while it has been discussed since the 1800s, it has gotten much worse with the emergence of social media.

This is especially seen with regards to politics, in particular in countries with two-party systems, but research suggests that there is also significant levels of political polarization in countries with plurality electoral rule (Urman 2020). Importantly, polarization also extends beyond the political system, and it is a growing issue within society, and this is not just about Apple vs Android or Pc vs Mac, this is happening within both the climate change and the anti-vaccine debate, and it is sowing conflict and stopping us from collectively working to solve global challenges. 

How does it emerge? 

Often when I hear people talking about this topic, they talk about how certain groups of people (rarely themselves) manage to seclude themselves from opposing views. This is what is called selective exposure, and it refers to how certain people only pick news and information that align with their views.

This often leads to the growth of the so-called “echo chambers”, where the same opinions are echoed back to you again and again – eventually reinforcing current views and potentially leading to more radicalized opinions. 

Of course, a lot of you are actively seeking out opposing opinions, and might therefore not see polarization as an issue for you. However, there are some problems with only seeing polarization as something that emerge when people seclude themselves from opposing views, in particular two things are in my opinion overlooked: 

  1. Exposure to opposing views has actually been found to increase polarization (Bail et al. 2018). This means that just because you might be aware of the trap of selective exposure, and actively seek out opposing opinions you might not avoid the issue of polarization. 
  2. Polarization is not just a product of the news sources you are exposed to – but just as much, a result of the people you surround yourself with. This tendency for us to surround ourselves with like-minded others is often referred to as homophily. 

Homophily, is, from my experience, often overlooked in conversations about polarization, and that’s a mistake, because as humans we all tend to engage with and follow people that are interested in the same things. We watch YouTube videos about things that we are interested in, and we follow people on Twitter and Facebook that are similar to us – just take a look at who you follow on Twitter and I suspect that most are either from within your profession or share your world-views. Importantly, you also need to remember, that this behavior is further amplified by the social media platforms that are built to cultivate this, to consume as much of our time as possible and to ensure that we keep using the platform. So just by using these platforms, you might fall victim to increased polarization. 

Why is it a problem? 

Throughout history the idea of a “good” debate has always emphasized the importance of diversity – and not only that you are exposed to different views, but also that you listen to people with opposing views. However, when you mainly listen to opinions and information shared by linked-minded others, or information confirming your current views, we end up with the echo chambers, where you constantly are exposed to “echoes” of the same opinions. This is highly problematic, because not only does it stop people from developing their current views, it can also lead to more radicalized opinions. 

One example from my own research is from my analysis of climate deniers that often discuss the issue of climate change within more polarized communities. However, while some of these are willing to engage in debates about the issue, others fall victim to the same stories being echoed over and over again. In one of the more extreme cases I have seen how a group of people are arguing that climate change is happening because of a giant red dragon flying around our solar system, hiding behind a second sun. And while I am skeptical about their “evidence”, which includes badly photo shopped images or optical illusions, I also see that others, because it is shared by like-minded others, accepts the “proof” and how it reinforces their belief in the narrative. 

What’s next?

Naturally, I am not saying that any of you believe in a giant red dragon flying around our solar system causing climate change by spitting fireballs, but every time I have investigated an echo chamber, I see that they are certain that they are in the right, and that the other side is being brainwashed. Of course, the fact that a smaller group of people believe this theory might not be a problem in itself, but as we have seen time and time again, radicalized ideas seeps into the general debate, such as Mark Zuckerberg being a robot or in the Pizzagate-case that was covered previously on this blog. I just hope, that with this blog I have inspired you to be aware of the growing polarization in society, to think about how you might experience polarization in your everyday life, and reminded you that it is about more than excluding yourself from opposing views, because polarization and radicalization is a growing issue that goes well beyond politics. 

About the Author

Daniel Lundgaard is a PhD Fellow at the Department of Management, Society and Communication at Copenhagen Business School. His research investigates how communication on social media (e.g. the use of emotions, certain forms of framing or linguistic features) shapes the ways we discuss and think about organizational and societal responsibilities.

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Cultural sensitivity and diversities in the measuring of sustainable development

Lessons learned from the responsible behaviors of individuals during the Covid-19 crisis

By Fumiko Kano Glückstad

The Covid 19-crisis has had – and still has – a very serious impact on a global scale. The New Normal guideline published by WHO [1] suggests that the responsible behaviors of individuals during the Covid-19 crisis have a critical impact on how a country is able to control the spread of  infection. However, the reactions of individuals to aspects of the New Normal such as “social distancing” and “wearing a mask” have been considerably diverse depending on who they are and which society they belong to [2].

Who they are?

To overcome a challenge like the Covid-19 crisis, but also e.g. the long-term crisis on climate change, socially responsible behaviors from individuals are required. Roughly speaking, such behavioral changes may be motivated by four types of personal value priorities [3]: i) anxiety-free values, ii) anxiety-based values; iii) personal-focused values; and iv) social-focused values (See the Figure).

Adapted from Schwartz (2012) [3]

Schwartz [3] states that: 

Socializers and social control agents discourage values that clash with the smooth functioning of significant groups or the larger society. Values that clash with human nature are unlikely to be important. The basic social function of values is to motivate and control the behavior of group members (Parsons, 1951). Two mechanisms are critical. First, values serve as internalized guides for individuals; they relieve the group of the necessity for constant social control. Second, people invoke values to define particular behaviors as socially appropriate, to justify their demands on others, and to elicit desired behaviors. Socializers seek, consciously or not, to instill values that promote group survival and prosperity.

Schwartz, 2012, page 12

This statement is highly relevant to the two aforementioned challenges: Covid-19 and climate change. 

Let us for instance think about the economic situation that the Covid 19 crisis has brought upon the tourism and experience economy (EE) sector. In order to thrive and secure the jobs of the employees involved in the sector, the EE sector needs to maintain a certain number of tourists visiting its destinations. On the other hand, society needs to prevent further spreading of Covid-19. Hence, the responsible behaviors of individuals expressed in association with their travel activities play a crucial role in maintaining the EE businesses.

However, individuals’ attitudes to traveling and to the Covid-19 crisis substantially differ, and manifest in different behaviors. For example, some individuals may prefer to enjoy traveling because they prioritize “personal-focused” values, seeking to fulfill their hedonistic needs, their needs of self-expression and to obtain a sense of achievement. Such internalized personal values may trigger a negative reaction to the constant social control enforced by Covid-19. On the other hand, a person inclined to “social-focused” values may instead tend to choose socially appropriate behaviors required to prevent the spread of Covid-19.

Which society they belong to?

While the value priorities of individuals within and across societies may differ, cultures also influence the formation of selves. Markus & Kitayama’s [4] [5] phenomenal theory, ‘Culture and Self’, defines the independent and the interdependent self-schemas that demonstrate “how sociocultural contexts can shape self-functioning and psychological functioning (Markus & Kitayama, 2010, page 425)”.

Adapted from Markus & Kitayama (2010)

Markus and Kitayama (2001; 2010) explain that:

When an independent schema of self organizes behavior, the primary referent is the individual’s own thoughts, feelings, and actions. Alternatively, when an interdependent schema of self organizes behavior, the immediate referent is the thoughts, feelings, and actions of others with whom the person is in a relationship.

Markus and Kitayama, 2010, page 423

Accordingly, feelings of happiness also differ depending on whether a person is rooted in a culture emphasizing the independent or interdependent self-schemas [6].

Specifically, in North America happiness may most typically be construed as a state contingent on both personal achievement and positivity of the personal self. Negative features of the self and negative feelings are thus perceived to be a hindrance against positivity and happiness. In contrast, in East Asia happiness is likely to be construed as a state that is contingent on social harmony and, thus, on a balance among different selves in a relationship.

Uchida, Norasakkunkit, & Kitayama 2004, page 227

Following the arguments of the aforementioned East Asian cross-cultural psychologists, the formation of value priorities might have been influenced by such culture-rooted self-schemas. Thus, the value priorities and culture-dependent self-schemas of individuals become important factors when scholars do research on sustainable and responsible consumer behaviors. In other words, if the mechanism of feeling happiness is fundamentally different between the independent and the interdependent cultures or between the social- or the personal-focused individuals, the motivations for behaving in a socially responsible way may substantially differ.

Socially responsible reaction to the New Normal

These existing individual and cultural differences may cause us to think about the definition of “socially responsible behaviors” in the context of the Covid-19 crisis.

On Wikipedia, “social responsibility” is defined in the following way:

Social responsibility is an ethical framework and suggests that an individual has an obligation to work and cooperate with other individuals and organizations for the benefit of society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems. A trade-off may exist between economic development, in the material sense, and the welfare of the society and environment…

From this viewpoint, the Covid-19 crisis could be an excellent opportunity for individuals to exercise “socially responsible behaviors” for the benefit of society, i.e. in order to return to a Covid-19 free society. However, it generally seems that the young generation of Scandinavians who have been world-leading in sustainable behavior changes have been less engaged in the socially responsible behaviors encouraged during the Covid-19 crisis. What we have learned from the Covid-19 crisis is that the cultures emphasizing the interdependent self-schema have had a smoother path to the New Normal behaviors.

An Australian writer, Paul De Vries posted his interesting observation of the Japanese people’s reactions to Covid-19 in Japan Times [7]:

A stumbling block of the “assumption of carrier” countermeasure is that it requires people to endure discomfort for the sake of the collective good, despite the likelihood of being COVID-19 free. Persuading a critical mass of the population to accept such an imposition is a challenging task, especially when new case numbers are in decline.

Three of the motivating factors that induce Japanese nationals to adhere are courtesy, obligation and shame. Courtesy is the willingness to act out of genuine concern for others. Obligation involves placing the needs of the group before those of oneself. Shame is fear of what others might think if one does not comply to group or societal norms.

There is no shortage of courtesy among the silent majority of the West, as unlikely as that can sometimes seem. A sense of obligation also exists, but typically toward groups less large than society as a whole. Shame, on the other hand, is not a dominant Western trait.

Cultural sensitivity and diversities in the measuring of sustainable development

The diverse reactions to the Covid-19 crisis observed in the past months are good examples demonstrating a need “to prepare a new cultural map of developmental goals, and to create and adapt development indexes that are more culturally sensitive [2]”.  

However, the mapping of cultural differences is not enough to capture heterogeneities of the respective societies. Here, the individuals’ value priorities play in. The theory of basic human values by Schwartz [3] implies that individuals prioritizing the “self-transcendence” value, for example, might be more prone to engage in the socially appropriate behaviors specifically required to prevent the spread of Covid-19. In order to effectively implement a policy for the various sustainable development goals, a new cultural map integrating the heterogeneities of societies will become necessary. In this way, a policy maker could distinguish messages suitable for the respective target segments and optimize their effects on the citizens’ responsible behaviors.

The recent development of machine learning technologies has made it possible to classify populations into such personal value typologies, to describe who they are, and to predict how they will respond to various situations [8]. In our project, UMAMI (Understanding Mindsets Across Markets, Internationally) [9], we developed a workflow and methodologies to investigate such heterogeneities of societies based on personal value priorities. It would be interesting to explore how these can be exploited in various application domains addressing the sustainable development goals in the coming years.

References

[1] https://www.who.int/westernpacific/emergencies/covid-19/information/covid-19-new-normal

[2] Krys K, Capaldi CA, Lun VM-C, et al. Psychologizing indexes of societal progress: Accounting for cultural diversity in preferred developmental pathways. Culture & Psychology. 2020;26(3):303-319. doi:10.1177/1354067X19868146  

[3] Schwartz, S. H. (2012). An Overview of the Schwartz Theory of Basic Values. Online Readings in Psychology and Culture, 2(1), 1–20. https://doi.org/10.9707/2307-0919.1116

[4] Markus, H. R., & Kitayama, S. (1991). Culture and the self: Implication for cognition, emotion, and motivation. Psychological Review, 98 SRC-(2), 224–253.

[5] Markus, H. R., & Kitayama, S. (2010). Cultures and selves: A cycle of mutual constitution. Perspectives on Psychological Science, 5(4), 420–430. https://doi.org/10.1177/1745691610375557

[6] Uchida, Y., Norasakkunkit, V., & Kitayama, S. (2004). Cultural Constructions of Happiness: Theory and Empirical Evidence. Journal of Happiness Studies, 5, 223–239. https://doi.org/10.1007/s10902-004-8785-9

[7] https://www.japantimes.co.jp/opinion/2020/05/22/commentary/japan-commentary/covid-19-versus-japans-culture-collectivism/

[8] Albers, K. J., Mørup, M., Schmidt, M. N., & Glückstad, F. K. (2020). Predictive evaluation of human value segmentations. The Journal of Mathematical Sociology, 1–28. https://doi.org/10.1080/0022250X.2020.1811277

[9] http://sf.cbs.dk/umami

About the Author

Fumiko Kano Glückstad is Associate Professor of Cross-Cultural Cognition at Copenhagen Business School. She works in the area of cross-cultural psychology. She has developed a workflow and methodologies enabling data-driven segmentation and typological analysis of consumers based on their personal value priorities in close collaboration with the Section of Cognitive Systems, DTU Compute at the Technical University of Denmark during the UMAMI project (2017-2020) funded by Innovation Fund Denmark. She previously worked as a consumer researcher and product concept designer of kitchen appliances at Panasonic Corporation, Japan and as a Japanese market specialist at Phase One A/S, Denmark.

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