The Stakeholder Podcast: The Real Impact of Climate Change

“We have to stop politicizing technology.”

This week, the United Nations’ Intergovernmental Panel on Climate Change issued its sixth assessment report on the increasing urgency of addressing climate change.

In The Stakeholder Podcast, Professor Ed Freeman connects with top business scholars on ethics, sustainability, finance and leadership. In this installment, he interviews Professor Mike Lenox to talk about the urgency around climate change and why stakeholder engagement is vital to solving one of the future’s toughest political, engineering and technological problems.

Lenox is Tayloe Murphy Professor of Business Administration, as well as senior associate dean and chief strategy officer of the University of Virginia Darden School of Business.

Engineering, Environment and Regulatory Questions

As a young UVA engineering student in the ’90s, Professor Lenox says he noted that “Every time there was an environmental disaster, there was always a business and economics angle — there is usually a managerial story at the heart of it, a failure [of management], not just an engineering problem.”

Driven in his student projects to uncover the interactions between the engineering, environment and regulatory questions, Professor Lenox says, he entered the Ph.D. program in engineering and policy at MIT. His early policy and engineering papers debated such issues as “Does it pay to be green?” He says, wryly, “It is depressing that people are still publishing some version of that paper after all these years.”

Demonization of Business and Political Upheaval

Professors Freeman and Lenox discuss how the demonization of business has slowed progress on climate change — business is constantly portrayed as “only a taker, never a giver” — and as the cause of environmental degradation, never the solution.

“Even as an economist, values matter, they shape your organization and its direction and strategy. And to deny that is a values statement in itself,” Professor Lenox says.

Discussing his new book, The Decarbonization Imperative, Professor Lenox points to five sectors with the most emissions and to two countries that are climate polluters, noting that climate change is a difficult problem because every country and every business sector is going to have to figure out how to reduce its emissions — and sometimes will have to go it alone.

Failing to do so, Lenox says, has some strange and terrifying results: “The real impact of climate change is different from the rhetoric. The earth is not dying. The human race is incredibly resistant and tolerant. But as for the direct impacts to the U.S. economy: We will have cities swamped. We may have to abandon Miami and other coastal cities. Manhattan will have sea walls. There will be extreme weather. Parts of the Southwest and California will become unlivable. But social political upheaval will be the worst problem.”

Lenox says climate-induced migration will create a global refugee crisis, with a likely outcome the rise of authoritarian regimes around the globe.

What Will Save Us?

So, what will save us? Faster engineering and smarter policy. “We have to stop politicizing technology,” Lenox tells Freeman. He cites the oft-repeated criticism that tech policy often “picks winners,” rather than allowing markets to function naturally.

But as Lenox points out, fossil fuels became our chosen technology because of massive, global subsidies for oil production and large-scale government favoritism of oil-driven technology.

“Oil isn’t the natural state of the world any more than newer technology is,” Lenox says. “Institutions still matter — they can impact how markets and technology evolve. We need to think about tech policy and how we increase our next generation technology and grow jobs, wealth and prosperity, and reduce carbon emissions.”