I’ve spent 40 years working on investment and disinvestment decisions, both in the public and private sectors. I’ve worked with railroads, ports, transit lines, and thousands of business location decisions. All too often I’ve looked back at my past decisions and said: “I wish I knew then what I know now.”
With sea level rise (SLR), we do know “then”. It’s a natural disaster in slow motion. It’s like a bad disaster movie: the avalanche or crashing oil trucks are heading our way and we can’t stop them. Sea level rise, though, is in slow motion. With this disaster, we have time to prepare. But we have to actually decide to do something about it now.
I thought I had a fairly sophisticated understanding of sustainability related issues. Then I heard John Englander talk about climate-enhanced Sea Level Rise (SLR). He made a compelling case that no matter how much progress we make on climate change, some of the damage is already done. Faster sea level rise is inevitable and sooner than I thought. Englander and other scientists predict that we could have a foot of global average sea level rise by 2050, possibly more. (And the awareness of sea level rise and its impacts is growing each week.) John’s observation was that very few businesses, cities or individuals are facing up to this prospect.
After hearing John speak, I did my due diligence. I read his writing. I read the reviews and commentaries. I tracked him down and talked with him intensely. I had a respected friend with a strong background in marine sciences vet the science. I learned some things:
- A lot of impacts are going to be felt much sooner than I’d realized. As we saw with Hurricane Sandy, a few inches can make the difference between a near miss and devastated infrastructure.
- A lot of impacts are going to be felt more broadly than I’d realized. SLR is not just a concern for the usual suspects like people living in south Florida or working in low-lying harbors. Consequences may be felt physically in upriver inland locations like Sacramento. Commercial or personal consequences may be felt anywhere if you do business with or ship through a vulnerable area – and almost all shipping goes through those areas. Not to mention airports – ever come in for a landing over water and hold your breath waiting for land to appear under the wings before you felt contact (think Logan, Laguardia…)?
Some people and businesses are acting on these insights, but not many. Interestingly, those who are acting don’t advertise: if you’re seeking business advantage by moving ahead of the crowd, why tip everyone else off? Overall, though, as businesses decide whether (or where) to buy or construct a facility that should last 20 or 30 years, most are not yet considering whether that facility will be viable – or dry – in that time frame.
Test yourself on this. If you have a responsibility for investment or disinvestment in assets, the question is: why aren’t you motivated? Do you know what your exposure, risks and unrealized opportunities from SLR may be? If you have a fiduciary responsibility for a company, a real estate portfolio, an investment portfolio, have you done your due diligence? If you deal with strategy decisions or capital investment for a railroad, a utility, a municipality, have you done your due diligence? If you are an insurer or reinsurer of any of the above, have you done your due diligence? If you compile your company’s reports to investors and the SEC, have you done your due diligence?
If the answer is no, you’re not unusual. As a species, we’re real good at acting when things are “urgent to finish”. We’re motivated by deadlines. We’re much worse when things are “urgent to start”. If a task takes a week and the deadline is next week, no worries: we’ll get it done. If a deadline is three weeks away but it’s going to take 5 weeks to get the job done, it’s even more urgent to start. But we don’t get too motivated by that. And if the deadline is measured in years, it’s still being debated, and it’s intimidating in its enormity, all the more likely we won’t focus now.
And these aren’t easy times for a business to look ahead. CEOs face a lousy macro-economic situation (and maybe macro-political too). With a tough economy and a scary election, they understandably may feel that they have enough on their plate. If I were a CEO, I might be afraid that the sky will fall before the ocean will rise.
Intriguingly, though, there are ways to start acting now, to start doing now what we’ll wish we did before “then”. There are opportunities to spend capital more wisely. There are opportunities to invest in options now, acquiring property or property rights on less vulnerable locations before the market prices those up. There are opportunities to shift investment out of more vulnerable locations and activities – before the market begins to discount their value. There may even be opportunities to spend less, by realizing that the useful life of some SLR-impacted facilities may be shorter than we think.
That’s why I decided to join with John and see if we could help businesses and industries get on with it and act.
The good news is, we know now what we’ll wish we acted on then. There’s time to act. But it is increasingly urgent to start.
[Unconventional disclosure: Normally bloggers disclose their financial interest in a topic so you can think about whether it influenced their views. This time, it’s the other way around: my views on the topic led me to create a financial interest by starting to work with Rising Seas Group.]
[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of Nadler Strategy’s clients or partners. To share this post, see additional posts on Scott’s blog or subscribe please go to nadlerstrategy.com.]