You’re probably getting bombarded with climate-related articles. Which makes sense, with Earth Day falling on Monday of this week. I personally celebrated by spending an extra hour in my garden and binging Ancient Earth on PBS. (Nothing like taking the 4-billion-year view to help this sink in: the earth is gonna be fine no matter what we do. It’s us humans who will suffer if we can’t keep the climate from warming too much.)

So why am I talking about climate change in a leadership newsletter? I recently sat down with Kellogg’s Meghan Busse. She explained to me that, to maintain a world that resembles the one we have, emissions would need to fall to net zero in the next thirty years.

Which is where companies come in. Because hitting such an ambitious target will require massive changes to how we produce and store power, manufacture goods, grow food, and heat buildings. For companies, this means finding new ways of doing just about everything—and quickly. “We are going to have to be as transformative as the Industrial Revolution,” says Busse, “but we have 30 years to do it rather than 150.”

Change won’t come cheap. But there are also plenty of opportunities for companies willing to act decisively. Taking advantage of them will require what Busse calls a “climate-capable leadership mindset.”

This week, I’ll share a few highlights from our conversation.

Leaders must perceive the situation accurately

Climate change is not a problem for the distant future. It’s already a problem today, and it will be an even bigger problem tomorrow, as natural disasters, resource constraints, and new diseases upend the best-laid plans.

“I sometimes tell audiences, ‘If you liked managing during COVID, you will love climate change,’” says Busse. Yet unlike the disruptive power of COVID, which decreased as the population grew immune, the disruption from climate change will only increase in intensity over time. “There’s no ‘managing through it’ for a few years,” Busse says.

Leaders must be prepared to mobilize a response

There’s understanding the situation—and then there’s acting on it.

From the vantage point of 2024, it is easy to roll our eyes at the 1770s mill owner who shrugged at steam power or the 1970s Silicon Valley executive who failed to hop on the semiconductor wagon. But today’s executives who neglect to act on climate change are guilty of the same hubris, says Busse.

The successful businesses of tomorrow will be those that adapt to the threats posed by climate change and take advantage of the opportunities. “We’re going to have to build and buy and invent and install so much stuff as we make this transformation that there will be big opportunities for anybody who can provide parts of that solution,” she says.

Leaders need to advocate for policies that promote longer-term thinking

Today’s leaders are in a bind. On the one hand, a poorer and more volatile world isn’t exactly appealing. Many leaders genuinely want to make the kinds of transformational investments that would benefit them in the future.

So these leaders do have an incentive to change—a strong one. But they also have a legal fiduciary obligation to do what is good for a firm’s shareholders, many of whom make decisions based on a much shorter time horizon. And in the short run, these necessary changes tend to cost more without adding much additional value. “Green cement isn’t better, green steel isn’t better, green electricity doesn’t shine brighter, but in many cases it’s more expensive,” says Busse. “We put CEOs in this untenable situation.”

Busse wants to see leaders start advocating for public policy that “either subsidizes the clean or taxes the dirty” to better align firms’ short-term profitability incentives with their long-term ones.

Still, Busse argues that, even in the absence of public-policy changes, leaders and investors are fundamentally undervaluing climate investments. Hear the rest of her case for a climate-capable leadership mindset in Kellogg Insight.

Jessica Love, editor in chief
Kellogg Insight