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Chapter 3: Decision making. No, it will not get simpler.

Let’s get cracking…

…by reading back over the content on decision making in Chapter 3 of the textbook.  Once you’re done, you should be fully equipped to deal with a simple problem called “world climate change”.  Easy! Right?...

Summarising very briefly:

Before you start reading this, quickly record your views on climate change: Is it happening? Is it bad? Who should act on it? Keep these records for the end of the reading piece.

Last week we looked at how climate change affects one of our most precious natural reserves.  This week, we are looking at our own little circle of influence and what we can do about it.  But first, is climate change really happening or is it just an over-reaction?

News about climate change is getting worse and worse.  2015 was the hottest year on record. You can have a look at a good graphic representation of this trend.  For decades now scientists have been warning us that the industrialisation and automation of the world has caused our climate to change and temperatures to rise.  This warning has been met with strong opposition, arguing that the climate change, if occurring, is not a result of man-made actions.

It’s not easy make up one’s mind about the whole issue of climate change.  Evidence, even if clear to scientists, is not always clear to the common person.  Have a look at the temperature charts.  Does it seem like global warming is here?  Now look at the chart that describes the various components that contribute to climate change.  What is the main contributor to climate change?

So the scientific community generally agrees on the trend of global climate change and its causes (human greenhouse gas emissions).  Scientists are the backbone of the academic world so you would expect that universities, where science has freedom, power and respect, would do what they can to address climate change. 

What could universities do?  They are already tracking temperature records, working hard on developing technological solutions for clean energy and teaching degrees which advance environmental goals.  There is even a union of scientists who use their scientific skills to ‘build a healthier planet and a safer world’.  What else can universities do?

Like other big organisations, universities run their own investments.  Many of those investments are managed by external funds and they often include at least some fossil fuel based investments.  There are two types of reasons why universities would divest from such companies: financial reasons and ethical reasons.   

From a financial point of view, companies that rely on fossil fuel seem to be at a great risk.  Recently, one of the biggest coal companies filed for bankruptcy protection to avoid shutting down for good.  From an ethical perspective, if universities invest in fossil-fuel companies, then they basically ‘bet’ on these companies’ success and endorse their actions.  The fossil fuel industry actively acts to block action on climate change by funding many sources of misinformation about climate change and lobbying against such action.  So if universities invest in these companies, they get involved in these unethical practices.  Universities are meant to be forward-looking institutions, focused on educating people and producing research in order to create a better future.  Universities would be expected to take action based on a long-term vision for the world.

Indeed, Australian universities have been gradually divesting from fossil fuels.  ANU led the way in 2014, and the University of Sydney followed a year later.  La Trobe University has also announced that it will completely divest from fossil fuels.  Other universities have these campaigns running too.   If your university isn’t one of them, maybe you can be the leader of this cause.

The decision to invest (or divest) is not really up to you as a student, but you can make a difference if you join forces with others.  A recent movement called started a campaign among Australian universities, requesting their divestment from fossil fuel companies.  They organise university members to ask for their institution to disclose to its staff and student members the university’s current investments in the fossil fuels industry, and to divest from fossil fuel companies.

Now clear your mind, take a few deep breaths, and think: If you had to answer the questions presented at the beginning all over again – is climate change happening? Is it bad?  Should Australian universities act on it?  Should you? – What would your intuitive answer be now?


Consider the following questions for discussion…

  1. This will be easy to answer, but you will surprised how often this issue is overlooked in managerial discussion: is the climate change question structured, or unstructured problem?
  2. Why would bounded rationality play a part in how people normally consider the climate change issue?
  3. Most climate change issues are discussed in group forum – at least among policy makers.  It makes sense to solve a global problem within a global forum.  What kind of problems, biases, and benefits does this group setting bring to this problem?
  4. If you were the manager of a university’s investments, and approached you and asked you to divest from fossil fuel companies, how would you approach that decision?  What considerations would guide you and how would they relate to the decision making process in Figure 3.1?
  5. What kind of biases listed in Figure 3.2 do you think affect university investment managers?  How would they affect you if you were one of the managers?
  6. It may be tempting to follow the rational decision-making approach to every problem you encounter as a manager, but keep in mind realistic conditions that are similar to those in managerial workplaces: time pressure, tasks overload, and multiple stakeholders.  How would you address this problem?