In this video clip from a Motley Fool Live interview, recorded on April 11, Climate Impact Partners CEO Vaughan Lindsay answers a question from Fool.com contributor Rachel Warren about what are some of the hurdles preventing many large companies from taking more decisive climate action and what kind of pressure will be put on them to do their part.
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Vaughan Lindsay: What are the key things that stops people taking action? I think people have to realize that actually, you could argue it one of two ways. One is it's a moral imperative and we all need to play our part in tackling climate change. The reality is just makes good business sense. The reason most corporates are doing stuff is they've worked out, that it's both the right thing to do and it's also good business.
Consumers are increasingly making choices on products and services based on the climate credentials because public awareness of climate change has always been high, but it's never been higher. What's changed is that concern is now translating into consumer choice. If I have to buy a cup of coffee and one says it's climate-neutral and the other one isn't and they cost the same price, I'll go for the one that's climate neutral.
Companies are realizing that actually, it makes good business sense. Consumers are voting with their feet, they are choosing products and services based on their view of corporates' climate credentials. Corporates are responding to that as they should do. Of course, what will happen is as they respond to it, they will be challenged to how strong those commitments are. That's not quite right and you need to get better. But, that's good natural evolution as people get held to account.
Then in addition, what companies are finding is investors, the financiers who are giving them the capital to grow are also making choices based on people's climate commitment. But their motivation is slightly different. They're worried about stranded assets, they're worried about highly carbonized business models that could somehow become a stranded asset and lose value.
They're putting a lot of pressure on companies to say, "You really need to show us what your de-carbonization strategy is because if you're not doing that, you're going to be discovered in the car industry." Electric vehicles are now dominating the value of the market and those that are not waking up to that, investors are getting very nervous about.
Companies are being galvanized to action from consumer pressure from the bottom and investor pressure from the top. Most good forward-thinking boards see that. That's why our conversations have moved out of the territory of ESG to the board room. We are talking to the chairman and CEO because they see this is business-critical and so they should and quite rightly so.