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Climate’s Collective Alliance

Collective action happens when benefits are greater than costs

Climate change has been part of the political discussion for decades. That’s what makes it so frustrating. Everyone knows about it, normal people accept it, and yet nothing seems to be done about it.

It's a classic collective action problem, which can be summarized as: "One of sociology's classic puzzles is how groups motivate their members to set aside self-interest and contribute to collective action."

To mitigate the worst from a warming planet would require a large number of parties — individuals, firms, governments — to forego their narrow, immediate interest in exchange for society’s broader, long-term benefit. It's hard because it is complex.

Climate's alliance may be shifting, though. Collective attention could, slowly and incrementally, lead to collective action. Three recent headlines caught my eye.

Larry Fink places climate change at the center of many trillion-dollar risk management industry.

Our investment conviction is that sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors. And with the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward ... to place sustainability at the center of our investment approach

Japan shifts from the source.

Japan is a major player in the coal power plant market. It provides both technology and financing for plants around the world. It will review and revise its decades-long approach to dirty energy.

Japan used to be an advanced country in environmental strategy, but it’s no longer seen that way,” environment minister Shinjiro Koizumi said. “I want to help revive the image even by a little bit.

Canada's public and private sectors may be reaching climate equilibrium.

The long-running, contentious Canadian tar sands project has been sidelined. And it wasn’t the government that killed it. It was the project’s developer:

Teck was clear that it does not want a situation where one project has to answer for all of Canada’s climate policies and climate commitments. Moreover global investors are not prepared to help a company the size of Teck to build a multibillion-dollar project. The global market was not prepared to be part of the political football.

Signals can be all-powerful to an alliance when delivered by leaders across sectors, countries, and interests.

The best signals improve clarity, align interests, and redefine success.

And that's critical because collective action is only possible when members have determined that the benefits are greater than the costs.

Here's to relentless, market-oriented collective action.