The two Thinking Ahead Institute articles I read the most are closely connected.
The 4-3-2-1 PIN code for a more sustainable economy highlights the roles of public policy (four units), corporations (three units), investors (two units) and individuals (one unit) in driving meaningful change. It emphasises the importance of collective effort and shared responsibility to achieve a more sustainable economy. The number assigned to each party represents their power to create an impact, with public policy having the greatest influence.
Written at the same time, Tim Hodgson’s article, If you want to see change, you can stop counting at ‘3’ is by far one of my favourites. It argues that relying on public policy to lead sustainability efforts is misguided, using the historical example of slavery abolition to demonstrate how change often starts with individuals and other sectors.
Corporations, the investment industry, and individuals must take the lead in experimenting and innovating, while public policy should later enforce best practices to ensure widespread adoption.
Despite the increasing evidence of the climate emergency, most of us seem complacent as our planet moves rapidly toward a 2C+ scenario. This widespread inaction can lead to feelings of hopelessness and climate depression among those actively trying to make a difference, creating a negative cascading effect.
What caused the inaction?
Part of this can be explained by the sociopsychological phenomenon known as the diffusion of responsibility, where members of a group feel less responsible when facing a shared problem.
Psychologists John Darley and Bibb Latané conducted research on this phenomenon. They set up an experiment involving a simulated distress call, making it seem as though someone nearby was injured. When participants believed they were the only ones who heard the cry, 85 per cent responded to help.
However, if participants thought one other person had also heard the call, only 62 per cent helped. When they believed four others had heard it, just 31 per cent took action.
The size of the bystander group is a key factor in the diffusion of responsibility. The individual need to intervene decreases as the group size increases.
With a world population over 8.1 billion, it’s clear how the diffusion of responsibility contributes to our inaction on the climate crisis.
However, we can’t not afford to just passively observe the unfolding climate disaster and hope that policymakers can be the superheroes. As Tim pointed out in his blog, more action needs to come from the six units (corporations, investors and individuals).
So, how do we overcome the barriers created by the diffusion of responsibility?
Finding a way through
Darley and Latané suggested there are five steps people go through before helping, which we can connect to addressing inaction in the climate crisis. Failing at any of these steps can lead to inaction.
Step 1 – Noticing the event
In 1950, global CO2 emission were six billion tonnes. The estimated level in 2024 will exceed 40 billion tonnes and is yet to peak. But people can’t taste, see or smell CO2. So these numbers mean little to most of us. Communication about the climate crisis needs to tell a story and build an emotional connection with the receivers, whether they are the general public, investors, or corporations.
Step 2 – Interpreting the event as an emergency
Our ancient human brain isn’t good at dealing with long-term problems. Primarily focused on immediate dangers, our brain fails to recognise the climate crisis as a threat. The urgency of acting now and the consequences of delaying must be emphasised more clearly (read the Thinking Ahead Institute’s paper, Pay now or pay later? discussing the need to address climate change sooner).
Step 3 – Feeling a sense of responsibility to take action
We’ve seen this play out in corporate commitments to net-zero targets. While many companies pledge to reduce emissions, too often the responsibility is perceived as collective, leading to delays in implementation. Accountability mechanisms, like transparent reporting and external validation, are essential to reinforce that responsibility is both shared and individual (such as senior leaders).
Step 4 – Deciding how to help
The path to action is clearer when people know what steps to take. For example, many investors struggle with integrating climate considerations into portfolios in a practical way. Initiatives like the Institutional Investors Group on Climate Change (IIGCC) and its Net Zero Investment Framework provide investors with a structured approach to setting targets and aligning their portfolios with net-zero goals, helping them decide where to prioritise their efforts.
Step 5 – Having the skills to carry out the action
Even with the will and sense of responsibility to act, a lack of skills remains a barrier. Knowledge development and skill-building are essential to address this. Various industry bodies and organisations offer online courses to assist investment professionals to make informed decisions. Such as TAI’s systems curriculum, which provides investors with practical tools to apply systems thinking, helping them address systemic risks.
Any issue that requires behaviour change is difficult to overcome.
In the latest Marvel superhero movie, Deadpool needs the right Wolverine to save his world. However, his world wasn’t saved by Wolverine alone, Deadpool played an equally important role – but had to change behaviour to achieve this.
Similarly, no single group can solve the climate crisis on its own. Progress requires a collective effort across individuals, investors, corporations, and policymakers to move the needle on one of the world’s greatest challenges.
Jessica Gao is a researcher at the Thinking Ahead Institute at WTW, an innovation network of asset owners and asset managers committed to mobilising capital for a sustainable future.
