At the recent TSSS event (CSR and the Capital Markets – click for event summary) a conversation broke out about the power of corporate innovation to drive change…as you may have guessed, the company being discussed was Tesla.
The point being made by one of the panelists was that the markets can drive great change and can be an excellent way to deal with environmental and social challenges. For the most part, I think everyone in the room agreed but this idea gets tricky when we dig into it a little further.
A few facts. Tesla was founded in 2003. It first became profitable in 2013. It has yet to even launch a mass market electric car, let alone effect major change in the auto industry as we know it. Yes, Tesla shows promise, but real change in terms of “an electric car in every driveway” is still a long way off.
Can we survive the waiting game?
If we’re talking about innovation to make it easier to prepare your breakfast or to clean your floors then the timing isn’t that crucial. When the innovation arrives it will be discovered by the consumers, the media will rave about it, the company’s revenues will skyrocket along with its stock valuation and the capital markets will have succeeded in doing their job. Capitalism will have worked.
But we’re talking about something entirely different when we discuss climate change. The ‘debate’ over climate change is no more. The science is clear. Climate change is an imminent threat to our way of life. We don’t have the luxury to wait decades for Tesla-styled innovation. We need the next innovative and disruptive business approach and/or technology that solves our climate, toxicity, scarcity, water and social challenges NOW.
Can government play a role to speed up change?
So how do we reconcile the effectiveness of Capitalism to solve some problems with its inability to recognize the urgency of others – namely climate change? And perhaps an equally important question is, if we know what needs to happen, why do we sit back and wait for the private sector to make these changes on its own? What role does government have in pushing a sector to be sustainable? Why do we have to wait for a Patagonia, Interface, or Tesla to eventually emerge and drive change in its sector? Certainly we must be able to use the power and influence of our governments to guide companies towards the outcome that we collectively desire.
The role of price signals
During the Q and A part of the evening, a couple of similarly themed comments came from the audience:
“People don’t like to make sacrifices. We need to put price signals on harmful behaviour to steer people in a better direction.”
Nelson Switzer, Sustainability Leader at PwC Canada
“Should it be the responsibility of the capital markets to conduct sustainability analysis or wouldn’t it be more efficient if we had clear price signals for the behaviour that we wanted?”
Krystin Annis, President for Clean Prosperity
I agree with this but the problem is that it isn’t happening. We haven’t done it. We sure can talk about it but we fail to walk the talk. We continue to let environmental and social harm dictate corporate behaviour in the quest for greater and greater profitability.
Why do we continue to let this happen? Why can’t we get government to put roadblocks in front of harmful behaviour and smooth the pathway in the direction that we want companies to follow for our collective well-being?
And for those of you who feel like government must be removed from the capital markets so that companies can find their way, driven by the desire to increase profits…I would argue that we simply don’t have that kind of “Tesla-Time” anymore.