The Economics of Climate Sustainability with Alexander Teytelboym, University of Oxford

Alex Teytelboym, Professor of Economics at the University of Oxford and Director of their Business Economics Programme, and Fiona Czerniawska, Founder & CEO at Source, caught up with Emma Carroll, Source’s Head of Content, on the latest episode of our The Future of the Firm podcast.

Alex and Fiona shared their insight on the following matters and more: 

• Climate change can be viewed as a failure of the market—in theory, this means that solving it could make everyone better off.
• Policy responses and regulation are lagging behind what is happening to the planet. It’s very difficult to predict how the risks will manifest, but they will be complex and unpredictable.
• Business leaders should think about climate change as being about operating in a complex and unpredictable environment. That means we need to build in resilience and redundancy.
• There is going to be a lot of creative destruction. Successful businesses need to innovate early and broadly, thinking about innovation in terms of a portfolio.
• Consultants need to talk to clients about the long-term view and about the real problems climate change poses—this can be counterintuitive to consultants who like to be optimistic and target near-term wins.
• Voluntary carbon markets and carbon offsets are potentially a terrible way for businesses to meet their climate goals. Regulation is not sufficient and there are reputational greenwashing risks attached.
• Carbon measurement should be simple, but there’s still a lot of difficulty measuring complex supply chains. The EU’s Carbon Border Adjustment Mechanism is set to accelerate progress, and consulting firms will be in demand to help clients comply with this.  
• It’s going to be harder to be an average manager with so many different goals to meet. This means it is going to be even more difficult for businesses to incentivise their people appropriately.
• We used to think about climate change as a slow process, but that’s no longer true. To succeed in this space, businesses must move early and create a portfolio of innovations.
• Seventy-five percent of clients think that the way they are approaching sustainability needs to change.  

If you enjoyed this conversation, don’t miss our sister podcast, Business Leader’s Voice. In our latest episode, we set out the big business challenges that clients say they’ll be facing in the year ahead.