US Withdraws from Paris Climate Change Agreement – The End of An Era?

(We wrote this article last Friday, but the US withdrawal from the Paris climate agreement has been knocked off the front pages in the UK at least by the atrocity in London on Saturday night. Watching the TV pictures and thinking yes, I know that pub, yes, been in that restaurant, is a somewhat chilling feeling. Anyway, our very best wishes to anyone affected by the events).

If you were born in the UK in the twenty years or so after the Second World War, as I was, you would have grown up at least initially with a view that your country was the centre of the world. “We” had won the Second World War. Japan produced cheap and nasty rubbish. The US was still (sort of) part of our “empire” and was looked on with affection like a rather precocious and loud younger sibling. Then the Beatles showed we could do this new modern stuff as well – London was the centre of the swingin’ universe.

That all came to a shuddering halt around the end of the sixties and the early seventies when we realised that the UK was in deep economic trouble, that no-one cared that much about us anyway, and actually our music was about the only thing that foreigners respected about ”Great” Britain.  The three-day week and the International Monetary Fund bailing us out in the mid-seventies were perhaps the low points of post-war British pride. (To all you young, born after 1980, Thatcher haters out there – I never voted for her either, but good heavens, in retrospect we needed her at the time.)

It takes time for the fortune of nations to change, but over longer periods the changes are significant. So last week’s decision of the USA under President Trump to pull out of the Paris climate agreement may turn out to be unimportant in the greater scheme of things. But equally, it could be one of those moments that signifies a turning point for the fortune of nations.

We do understand the whole argument about “America first”, and the experts seem to think that this may not make too much difference to the future of renewable energy globally. (The Times published an interesting editorial saying this doesn’t really matter with regard to global warming, and many US cities and States are going their own way in any case, repudiating Trump’s views.)

But it might mean that the US surrenders any sort of leadership position in what is going to be perhaps the biggest global industry within my lifetime. It will also be interpreted – rightly or wrongly – to mean that the US is not interested in the wider “benefit to humanity” agenda, if that does not meet the country’s more parochial goals. The US will be giving up “moral leadership” as the BBC put it here.

Combine this with The Wall, Trump’s attempts to stop travellers from various countries, and a general feeling that the US is no longer a welcoming country, and we can start to wonder if this is a tipping point in the world order. It is up to the people of the US to decide how they want the country to conduct itself, of course, but others will decide how they feel about the US and how they want to interact with what is still clearly the richest and most powerful country in the world by some margin.

China in particular must think this is all great news.  As that country uses both soft and hard power, subtly and not so subtly, the US losing friends and allies must be very good news. And corporate America is not happy - leaders of companies such as Google, Apple and others including major fossil fuel producers such as Exxon Mobil urged the President to stick with Paris.

Trump does say he will re-negotiate to get a “better deal” for the US. But will other leaders countenance giving him concessions, knowing that the Trump personality means he would then take huge satisfaction in telling everyone how smart he is and how he put one over the other leaders and “won” that negotiation? (Several countries in fact immediately said ”no” to re-negotiation.)

What about issues for procurement people? It all seems to point to more protectionist behaviour at national level, which is not good news for a profession that generally believes in openness, free trade, competition and dynamic markets. And it introduces new or increasing threats that need to be considered as part of the organisational supply chain risk analysis (which you’re all doing rigorously, of course … )

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