From Talk to Action (The Scorpion’s Tail Club)
How will extreme climate events impact your personal financial security?
We conduct business that, broadly speaking, allows for environmental and social harm. Then, after business is conducted, politicians and regulators add rules to repair the harm. That seems like a rather cumbersome and counterintuitive way to go about “doing business”. Why do we allow the activities that cause the harm in the first place? Isn’t prevention [almost] always better than repair?
What If…?
What if we could reduce the harm caused when conducting commerce so that there’s less harm that needs fixing? Imagine if business could focus more on innovation and profits and less on the growing impacts of “tail risk” climate events, uncertain regulations and expensive repairs. An approach that could guide business using a form of “economic guardrails” that would clearly identify what constitutes “in-bounds” vs. “out-of-bounds” behavior. A way to orient business towards sustainable profits (rather than profits at all costs) and greatly reduce the need for so many cumbersome “band-aid” regulations. What if we could tweak our economic system by adding 3 simple business laws that could reduce uncertainty and unleash capitalism to drive innovation and profits without the need to follow behind with a cleanup crew.
Sounds great - but there’s a problem.
Fierce Headwinds
People in positions of power, especially in the foundational sectors of capitalism (banking, investments, pensions and insurance) are doing extremely well - so why would they choose to abandon what has worked so well for them and pivot towards a massive effort to drive change towards sustainable profits?
Today’s tail risks are tomorrow’s everyday events - so what will tomorrow’s tail risks look like?
(Source: Climate Scorpion)
Even if they acknowledge that today’s 1 in 100 year floods, forest fires and droughts are now occurring annually and that the next wave of “tail risks” will be even more massive, we’re still talking about a monumental effort that would require a near perfect mix of strategy, execution and political support. Now add to that our reticence if not outright resistance to change and it’s natural to expect people to prefer the seemingly less turbulent and mainstream-supported strategy of green-growth as the go-to path to deliver a better future (despite evidence to the contrary). But, despite all of these headwinds and challenges appearing so overwhelming, now is actually the perfect time to mobilize for change!
It’s Messing Up My Money - And Yours Too
Imagine what would happen if the discussions around personal financial security could be nudged away from emphasizing asset appreciation regardless of the costs, to better take into account how extreme weather events actually undermine those efforts. The type of environmental events whose impacts will not only threaten the insurance and investment industries, but more so, the economic system as a whole. And we’re not talking about 2050 or 2075 - these tail risks are ready to strike now, and they threaten us with planetary insolvency, what the authors of the Scorpion’s Tail Report refer to as the ‘risk of ruin”.
How would this realization impact and motivate people who work within the insurance, banking, investment and pension industries? After all, their personal financial security is even more exposed because they are not only consumers like everyone else, but they are also employed in those same financial sectors whose continued viability is also at risk. What will they say when their own job security and retirement dreams are brought into question? How will they cope when the level of uncertainty rises with respect to their own investments, pensions, and even their children's life plans and inheritance? Those factors would certainly shift the equation for them - wouldn’t it?
Tackling the Challenge Head On
1. A Safe Place to Talk
The danger that tail risks place on economic and planetary insolvency is no secret in financial circles. In fact, there are many influential leaders who are itching to have frank discussions about how to prepare for this looming threat. But even today with all of the heat records being broken and the daily incidents of extreme weather, the topic of climate tail risks and the potential for widespread insolvency is still considered to be too risky (to one's personal and professional reputation), to openly discuss with mainstream audiences that prefer to discuss green growth, technology solutions and how to “build back better”.
What’s desperately needed is a safe place (like that provided by the Scorpion’s Tail Club!) where financial sector leaders can remove their self imposed muzzles and have open and frank discussions about how to strategize for these looming climate risks, not only for their industry but also for their own precarious employment futures. But that’s not all they want. They want to go beyond talk and take impactful action to bring a clear message to both regulators and politicians, backed up with focused policy positions and supporting legislation to make sure that all industries - and especially their own - are ready for whatever tail risks might come their way.
2. Build Alignment Using the 3 Laws of Business
The Scorpion’s Tail Club will be to bring together and unite the various industry leaders so that despite differing views, the group will be able to speak with one voice. To streamline this effort, all discussions in The Scorpion’s Tail Club are “guided” by the 3 Laws of Business created by Climobilize and structured similarly to the 3 Laws of Robotics. This framework of “Laws” will ensure that members are guided by a common core set of principles. This way, even if they have different priorities or views on strategies, they will still be able to build a shared vision for continued economic profitability, while simultaneously preventing the permanent harm to people and the underlying environmental systems upon which we all depend.
The Scorpion’s Tail Club
Over the decades, many frameworks and institutions have tried to fix the harm caused by our economic system by doing everything possible - except changing the system itself. Similarly, very few forums or discussions have managed to build sufficient mainstream support to explore how the system itself could be changed in a way that doesn’t cause such massive disruption that it becomes simply untenable. The Scorpion’s Tail Club and the 3 Laws were created to overcome these challenges that have stymied previous efforts to refine corporate and legal governance in order to help realign the economic system with the wider environmental and climate imperative.
Next Steps
As the Scorpion’s Tail Club prepares for its formal launch, we’re actively speaking with, briefing, and “vetting” financial sector leaders in the insurance, banking, investment, and pension sectors to build the inaugural cohort of 100 Club members - 25 per sector. They will be the ones who will have influence over the direction of discussions regarding the flow of the capital that determines the future path of our economy and our environment for generations to come. If you are in 1 of these sectors and want to be involved in these discussions - we want to speak with you.
Of course, while the financial sector may have a great impact on the flow of capital, ultimately all sectors and businesses from small SMEs to global corporations, need to be involved. So if you’re a corporate sustainability manager or director who understands that business must have the right to profit BUT it must do so in a way that aligns with the needs of the wider environment, then there’s also a place for you in the Scorpion’s Tail Club.
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