Capitalism, the SBTi Controversy and my Grandma

A few weekends ago, I visited my Grandma in Charlottesville, Virginia. She’s 93 years old and spent the first hour of our visit talking my ear off about politics and strategy and the November election. That evening after dinner, we played gin rummy with some other family and she won over half of the hands. She is still sharp as a tack. When I asked her why she is still so sharp and healthy, she gave me a simple answer, “I have lived a life of moderation”.

Then last week, I opened my computer to find an email from Mark Tercek’s substack, The Instigator, with the title, “Capitalism Won’t Save the Planet”. This email coming at the end of a week of arguments and counterarguments over the Science Based Targets Initiative (SBTi) controversy around carbon credit usage for corporates to meet Scope 3 commitments.

It’s funny to me how seemingly disparate things often weave together to create a cohesive narrative, a learning, a message. This time, it was the intersection of Capitalism, the SBTi Controversy and my Grandma’s reflections on moderation that illuminated, at least for me, a possibly wiser path forward.

Yes, I might be crazy, you can be the judge of that. Stick with me til the end of this article and I think you just might find a bit of that wisdom in the reflection that follows.

What my Grandma Does that Capitalism Doesn’t

I think we can all agree that Capitalism without at a minimum significant guardrails is not a system designed for moderation. It is not a system that fosters balance. Yes, markets theoretically have an equilibrium point, but that assumes many conditions that we do not have in the current paradigm. The market failure that I focus most on today, is the lack of inclusion in our economic system of externalities, like the value of nature. But I would argue that even if we put the perfect value on nature (which is likely impossible to do), Capitalism is still unlikely to deliver a society grounded in balance and moderation.

And as my Grandma shared, one of the keys to a long and healthy life as an individual human is everything in moderation/balance. Planetary health is really no different from the health of individual organisms. The ones living a life of moderation, a life in balance, more often than not live the longest and healthiest lives. 

So how do we achieve this societal shift towards a system grounded in moderation and balance? Mark highlighted in his blog, “The private sector’s voluntary climate commitments are positive and should continue to be encouraged, but they will never be sufficient to meet our decarbonization goals because there are real limits on how far they can go.” He goes further to say, “But importantly, please also push hard for the public policy that is essential to take our climate progress to the next level. All big environmental wins in the past started with tough regulatory policy. Think Clean Air Act. We should require — not ask — business to take the climate actions that we need, and we should use whatever set of policy options we can make politically feasible (both carrots and sticks).”

Mark spent 24 years on Wall Street before serving as the CEO of The Nature Conservancy for 11 years. He was a core part of the push for private sector action on climate. Where he has now landed in his thinking, is a realization and acceptance that I see now reverberating across both the private and public sector - the only path forward is through policy (and a cultural/spiritual shift, but I’ll save this for a future article 🙂). We cannot rely on markets and the private sector alone to solve climate change and bring humanity and our economic systems back into moderation and balance with nature and each other - policy entrepreneurship is the path forward.

So we know we need policy, but what else can my Grandma teach us about how best to advance policy? Time to chat about SBTi.

The Wisdom of my Grandma’s Philosophy applied to the SBTi Controversy

Reflecting on the differences of opinions on whether corporates should or shouldn’t be allowed to use carbon credits to meet their SBTi net-zero commitments, I began to think where we would land with policy if we applied this lens of moderation, balance and perhaps even finding the middle path. 

In addition to my Grandma, this pragmatic approach to policy progress also comes from my parents. Both of them worked in state government for over 35 years, my Mom on healthcare and my Dad on environmental and climate issues. Our dinner table conversation focused on strategies for passing legislation and it was always a discussion of what is ideal versus what is possible. There was always a watering down process of legislation in order to get it passed.

What does a moderate, balanced approach look like when it comes to policy? Remembering that for the most part, policy is largely a game of incrementalism. It is a game of small wins and progress. Where maybe once in a few decades you get the chance to do something big (like my Dad spending 25 years writing and re-writing the Cap and Trade Bill in Washington State). 

So how does this all relate to the SBTi controversy? 

I largely see two camps that have formed, one that believes in applying market-based mechanisms to solve climate change and another that doesn’t. Two groups with a difference of opinion as to the right mechanism, where this particular question of the use of carbon credits to compensate/offset residual emissions has become a proxy fight for those two philosophies. I see how much anger and frustration and even vitriol has emerged and when I look underneath these messages, I just see people. People on both sides that are close friends of mine. People that I know are all avid environmentalists, that care deeply about solving climate change and reversing nature loss and largely share the same fundamental values. 

As I step back, I’ve been reflecting on why we are spending so much time infighting over these details, trying to win a small battle against another side that largely shares our values, that’s energy, resources and time that we aren’t spending trying to influence the other ~half of humanity and the vast majority of businesses that are completely ignoring any issue in the first place. 

While we are fighting over whether carbon credits should be allowed to be used for scope 3 mitigation for a few thousand companies, there are millions of companies (and many governments) not taking any action on climate and nature. And this is where I will take a minor position myself in this argument. 

We must remember that SBTi is still just voluntary. Pushing voluntary policy that requires a reduction in emissions aligned with 1.5C may be helpful in informing future regulatory action, but if it’s also one that little to no corporates will voluntarily adopt, then we must be honest with ourselves about the point of the initiative to begin with. Let’s accept that SBTi is an effort to inform future regulatory policy, but not fit-for–purpose to catalyze voluntary private sector action today. This is where a ‘policy moderation’ approach is critical to incremental progress today.   

One more note about this infighting instead of trying to influence the largely forces at play. I know when I get scared and anxious, I search for the nearest outlet for my anxiety and that is not always the healthiest or productive outlet. And I think many of us have channeled that energy into arguing about the intricacies of the mechanisms/solutions that exist today, fighting over details that are important, but distract us from working to also address the underlying forces that got us to where we are today.

The BOTH, AND Approach to Change-making

Policy today needs to be moderate and pragmatic in order to be viable. This incrementalism is needed and valuable.

But paradigm shifts are also desperately needed. Over the last few months, I’ve had some incredibly thought provoking conversations with Justin Adams. A leading thinker on systems change around nature, climate & justice and the role of spirituality in our efforts. One key piece of wisdom he has shared is that we must apply our energies today to BOTH work within our current system to make incremental progress AND be designing the ideal systems/mechanisms and sowing the seeds for what could drive and establish a completely new paradigm. 

The point being that we don’t have to choose between incrementalism or a complete overhaul. We can be making incremental progress (near-term policy in moderation) while also working towards creating the right conditions for a new system to emerge and tinkering with what those new mechanisms and systems could be (long-term policy/systems emergence). And if we get too bogged down fighting over the details of the near-term incremental policy, we won’t be putting enough energy into fostering the emergence of the true system change needed for humans to come back into balance with nature and solve climate change.

My call to us all is instead of fighting over the particulars of making progress on climate and nature today in a system that fundamentally does not value it, let’s work together to find some middle path incremental ways forward today while also holding space for and designing new mechanisms and systems that might emerge in their place when the conditions are where they need to be to make that transition. 

I hope we can all agree that neither SBTi voluntary guidance or voluntary carbon markets are the end state solution, both are far from it. Let’s use them to make incremental progress while we put our true energies into developing the long-term solutions that fundamentally change the system to value nature, non-human life and all human life, no matter who you are or where you come from. 

And I want to recognize the staff at SBTi and others who have and continue to dedicate their lives to getting the science right and policy as effective as possible. I share my thoughts above by no means to diminish your hard and critically important work. In fact the opposite, I share this as a reminder to not get too bogged down in the specifics, to remember the bigger game afoot and be wise about where we spend our limited energy and resources. 

So let’s find that middle path policy today for the use of carbon credits in corporates meeting net-zero and let’s bring together those with differing opinions to do so. And then let’s continue to work together via policy in moderation to achieve incrementalism within the reality of today’s system while also working hand in hand to invent what might come next that fundamentally changes the paradigm of the system itself.

As EO Wilson once said,

“We are drowning in information, while starving for wisdom.”

Let us make sure we allow wisdom to have a seat at our science-based tables. 

- Eric

P.S. I couldn’t find a good home for this last note in the article, but I felt compelled to share one last thought. I think it’s long overdue for our society to value policy entrepreneurs as much, if not greater than, commercial entrepreneurs. Maybe with the next generation of leaders, we will see that shift come into being.