How Business Can Fight Climate Change: Building Companies that Combine Profit and Sustainability

By Amir Hegazi

"A must read for any businessperson who wants to make a positive impact."

-KATIE SULLIVAN, Managing Director, International Emissions Trading Association (IETA)

 

 

How Business Can Fight Climate Cha

• Language: English
• Publisher: TRANSFORMENA PUBLISHING
• Release date: Apr 6, 2022
• ISBN: 9798985840131

Book preview

FOREWORD

By Tom Rand

You don’t have to be an environmentalist to want radical action on climate. That’s just good sense. Nor must you be a greed-is-good Wall Street titan to believe market forces, profit, and private capital are critical pieces of that action. That, too, makes good sense: using the most powerful tools in our arsenal to solve our most wicked problems is just being pragmatic. Rewiring economic systems to lower climate risk could not be a more politically centrist, less controversial notion.

Yet, until recently, the business community was largely absent from real engagement on climate. A few nice words acknowledging the risk was real would pass for climate credibility. Things have changed. No business leader today can navigate what’s coming (or even hire good talent) without an explicit—and aggressive—climate strategy.

About 10 years ago, I debated an energy expert (and fossil fuel advocate) on a business network. We came to loggerheads. He pushed the view that fossil fuels were useful, relatively cheap, and plentiful. I agreed, but argued clean energy was equally capable of running a modern economy—while it required investment, policy, capital, and hard work, it was a necessary technological revolution to fit the climate problem. He scoffed, Well, I’m agnostic on climate risk! What!? I stifled an angry response, and politely pointed out that an energy expert being agnostic on climate risk in the 21st century is like a pilot being agnostic on whether the Earth is round: you might be able to fly from New York to New Jersey, but on any serious flight like New York to Paris you can’t be agnostic to the dominant feature of your reality.

The 21st-century global economy will be dominated by climate risk. In the upside scenario, we mitigate that risk to tolerable levels—say 2°C of warming. What does that mean? A fundamental rewiring of the global economy—soup-to-nuts!—within a decade or two. This means massive opportunities for those who provide solutions, and huge losses for those stuck and stranded with high-carbon assets. In the downside scenario, we don’t act in time and the economy comes crashing down on our heads as the ecosystem that nurtured civilization turns hostile. Have you seen the movie Mad Max? And so whether we solve the problem or not, climate risk is the single most important geopolitical variable of this century. Ignoring it means flying blind. This book is for those, with open eyes, who want to play a role in the upside!

Rewiring the global economy to shift the capital flows and rebuild the infrastructure that underpins the roughly $6 trillion we spend annually on energy would be a massive job over almost any time scale. Doing it in just a decade or two is an unprecedented, even radical, economic change. But an economic revolution is not the same thing as a political one. What we need now is a renewed climate capitalism: a set of rules, incentives, and attitudes that makes our economic system responsive to the climate threat.

Capitalism comes in many flavors: Wall Street’s finance capitalism, Russia’s rough-and-tumble anarcho-capitalism, Indonesia’s crony capitalism, China’s state capitalism, the protectionism that dominated trade in the middle part of the 20th century, and the globalized markets of the 21st century. Sweden is as much a capitalist country as the US. A forceful public sector is no contradiction: Roosevelt’s New Deal did not make the US any less a capitalist country. Capitalism, broadly understood, is simply a matter of using markets as an organizing principle of our daily transactions. Climate capitalism, from this viewpoint, is one more flavor of economic system. Far from being politically radical, it’s just a pragmatic response to a real emerging threat. The good news is there is evidence of the tide turning.

First, capital markets are changing—fast. In just the last two or three years, the financial community has leaped into action. When we raised our second fund at ArcTern Ventures, you could count on one hand the number of climatetech-focused funds. Now, there are at least 50, and more spring up weekly. Capital is pouring into the sector. Even those who cared nothing about climate for years are positioning themselves to profit from what is now an inevitable transition to a low-carbon economy. When the big hedge funds and monolithic car companies start placing giant bets on getting a low-carbon horse into the race, that transition becomes a self-fulfilling prophecy.

Second, technology is unstoppable once it gets going. The cost curves only go down, and performance curves up. You couldn’t stop a technical revolution if you tried. Its sweeping changes are clear in hindsight: the engines of the industrial revolution, the mechanization of agriculture, the microchips of the data revolution. Similarly, clean energy technology is igniting an energy revolution. Instead of burning stuff we find in the ground, a distributed solid-state energy system will harness and store endless supplies of renewable energy. Cars won’t use internal combustion engines for much longer. The economic dynamism at the dawn of the 21st century feels unstoppable, and a lot of that creative force is, at last, aimed at climate risk!

Third, the private sector is aligned with public sector targets of deep cuts to emissions—30–40% by 2030 and net zero by 2050. Few can hire the talent they need absent these targets. All have empowered teams to hunt for emission reduction opportunities within business units. Many are putting pressure on supply chains. Most have put emission reduction on a strategic footing, unlocking capital budgets (not mere operating budgets) that enable much longer payback periods and a wider set of solutions.

Capital is flowing, technology cost curves have plummeted, corporates talk a big game and are actively seeking solutions: all reasons to be a bull on cleantech. But I remain a bear on climate. The human spirit may run hot, but so too does the planet. Lurking behind today’s optimism is the biggest, baddest dragon of modern times.

The difficulty in hitting those targets—which only give us a coin toss’s chance of stopping at 2.5–3°C—is hard to overstate. Indeed, absent wartime-like economic radicalism, they’re impossible. We’ve only seen reductions of 5–7% a year (what we will need for three decades) in times of economic ruin: Russia’s economic collapse in the 1990s and the recent Great Recession in North America and Europe. We face the perverse situation where the cure seems as bad as the disease.

Whatever private markets can deliver, it won’t be enough. It’s too late for incremental change. Hence, the public sector is a critical partner to accelerate the transition with targeted, deep, meaningful market interventions. A price on carbon is an economy-wide signal that accelerates forces already in play. Institutions like the WTO can be transformed as climate hawk, leveling the playing field between jurisdictions to ensure regulatory laggards get no advantage. Regulatory frameworks to ensure real transparency on carbon and climate risk might soften the landing as capital flees high-carbon, high-climate risk sectors. There is a plethora of well-understood policy options. And with business on board, there is no reason to believe these accelerants won’t come into play.

Climate disruption threatens our civilization in ways the public is beginning to understand. The military community calls climate risk a threat multiplier—it’s not so much single climactic events but how they push and pull at our social fabric. The longest drought in living memory made Syrian farmers leave their land and move to cities. The accompanying spike in food prices, combined with new urban density, caused the Arab Spring riots. The threat didn’t end with the ravages of that ongoing war: as refugees flowed into Europe, Angela Merkel answered the humanitarian call by accepting a million Syrian refugees. That triggered a backlash by the far right—hence, the rise of a neo-Nazi movement in Germany is directly linked to a climate-related drought! That’s what those military types mean by threat multiplier—our social fabric stretches and tears, our civic institutions fail, as climate risk bites.

The call to the business community is clear: to not only accept but drive the radical economic changes needed for massive cuts in carbon. There will be losers. There will be stranded assets. There will also be winners and new markets. Today, business has many degrees of freedom as to how it might respond to climate risk. We can still choose which low-carbon pathways we deem the most effective. So—get ahead of the low-carbon curve, find your own path forward, be on the right side of history. Drive this change, accelerate it—that’s what How Business Can Fight Climate Change is all about!

In the distant future, the record of our time will be found primarily in the spike in atmospheric carbon traces we leave behind. Our geological record is already set. We will be known as the Carbon People. Whether or not those distant relatives look sympathetically on their deep descendants, only time will tell. My fear is not an economic revolution, but the lack of one. That said, I’m encouraged by the recent increased awareness and mobilization within the global business community—although we need a much wider and mainstream movement. Again, I believe the role the private sector plays is foundational to addressing this issue. How Business Can Fight Climate Change provides great perspectives and insights as well as practical examples for any businessperson who not only seeks to understand the intricacies of the climate crisis, but who also wants to be part of the solution. It’s a timely guide to maximizing profit, minimizing loss and—most importantly—being on the right side of history!

—TOM RAND, Managing Partner of ArcTern Ventures and author of The Case for Climate Capitalism

PREFACE

Climate change is the single most serious existential threat facing the world today. Never in the history of mankind have humans ever encountered a crisis of this magnitude or complexity, let alone one that is global in nature and touches on every facet of our lives and livelihood. Nor is climate change a problem that can be resolved by a single breakthrough innovation or masterful diplomatic alliance. There is no vaccine or one-off remedy for climate change. Nor is it a problem we can dodge by wearing a mask or even by choosing to take an enormous hit, in terms of collateral damage, and then moving on.

Furthermore, climate change is already here and is here to stay if not properly addressed fast enough. It’s not a crisis that might potentially happen—wildfires, record heat waves, severe droughts, violent storms, unprecedented floods, alarming rising sea levels are already here and worsening. The tragic upending and loss of lives is happening as we speak. As carbon and greenhouse gas emissions continue to rise, the situation can only get more dire. We are indeed facing a climate emergency.

Finally, there’s no single entity or institution that can be relied on to save the day, be it politicians and governments, the global scientific community, or do-gooder philanthropists alone. The climate challenge will require nothing short of a multipronged, all-hands-on-deck approach, which also engages the global business community like never before. Further, it’s not a challenge that’s limited to the domain of renowned business leaders or Fortune 500 corporations. Without a global movement that informs, inspires, and mobilizes the private sector to be proactive and innovative on this front, the odds are stacked against us avoiding a climate disaster.

The objective of How Business Can Fight Climate Change is to do exactly just that. By raising the awareness of the layperson in business on this topic, while providing a multi-perspective approach covering a wide array of related topics and encouraging examples of businesspeople and companies making an impact, this book will hopefully resonate with the average businessperson who is interested in learning more about the subject and making a positive contribution.

As an investigative author, my approach is to surface the most insightful views and impactful practices on a given issue, and to demystify and present these to the reader in a captivating and easy-to-understand way. In doing so, my moonshot aim for this book is to engage an untapped, large readership base within the global business community that is vaguely aware of the intricacies of this issue and, in effect, help turn them into change agents.

I would very much enjoy hearing from you. I hope you find value in the following pages and commit to implementing whatever insights or lessons you may pick up.

—AMIR HEGAZI, April 2022

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PART I

SERVICE PROVIDERS & NON-GOVERNMENTAL ORGANIZATIONS

A close-up of a person smiling Description automatically generated

JAMIE BECK ALEXANDER

Director, Drawdown Labs

www.drawdown.org

Jamie Beck Alexander is a solutions-oriented corporate climate advocate and coalition builder, and the Founding Director of Drawdown Labs. Jamie joined the Project Drawdown team from Ceres, where she led corporate engagement on the West Coast, working with companies to set ambitious emissions-reduction targets and leveraging their influence in support of strong climate and clean energy policies. At Ceres, she launched a public-private partnership with the City of San Francisco and Bay Area companies to identify and deploy collaborative solutions to decarbonize the transportation sector. Previously, Jamie served as a Civil and Foreign Service Officer with the US Agency for International Development (USAID), implementing projects to combat malaria and other infectious diseases. She served in Bangladesh, India, and Tanzania and led an agency-wide effort to better integrate local solutions and voices into foreign aid programming and decision-making. She also worked with the UN Office of the Secretary-General, the design firm IDEO, and Indigenous peoples in the US, the Amazon region, and the Andes. Bringing her multidisciplinary background and focus on solutions to bear, Jamie leads Drawdown Lab’s work with companies to deploy climate solutions at scale.

__________

Amir Hegazi (AH): Let’s start with a little bit of background about you and Project Drawdown, as it relates to climate change.

Jamie Alexander (JBA): I am currently the Director of Drawdown Labs at Project Drawdown. Drawdown Labs is Project Drawdown’s innovation hub, where we take the research and analysis that Project Drawdown has done about the biggest solutions to climate change and apply them to the business setting. We work with large corporations and smaller businesses to help equip them to scale climate solutions.

Ironically, I came into this work from a different field altogether. I was in international development work, doing foreign aid work with the US government and USAID. I was living and working in Bangladesh. What I saw there convinced me—even though I was there working on health issues—that climate change was such a foundational challenge in that country. My experience there just totally shifted my worldview to understand that climate was central to everything else we cared about and were working for.

I was also in Bangladesh when the Rana Plaza incident happened. Rana Plaza was a massive warehouse for a factory to which many companies had outsourced the manufacturing of their clothes. It collapsed and killed more than 1,000 people, which activated me to realize that business has a huge role to play and a responsibility in both the environmental and social issues that we’re facing.

I also witnessed the devastation of flooding in Bangladesh, as the Tibetan Plateau and the glaciers melt and run down into the low-lying areas. Bangladesh is one of those places that’s slowly sinking underwater, and with the increased risks of climate change, things will only get much worse there. In addition, all the work that we were doing there—tackling malaria, AIDS, or whatever—is going to get harder to do as a result of the effects of climate change. It will lead to the increased suffering of the people there and take a toll on the country as a whole. In that sense, climate change is almost like a crisis multiplier: it exacerbates whatever problems are already out there.

It was the experience of living there that made me feel like I had to work on climate change, but it was the Rana Plaza incident, where that warehouse collapsed, that made me realize I wanted to work on the business side of things and influence change there.

AH: Could we dig a bit deeper into Project Drawdown, in terms of how it came about? What are its scope, mission, and approach?

JBA: Project Drawdown was founded seven years ago to address the lack of communication about solutions to climate change. At the time, there was a great deal of focus on the problem and the people who are responsible for the problem, yet there was very little focus on the solutions to the problem. We undertook a global research project to scour humanity’s wisdom for all the practices and technologies we could find that exist today that address climate change.

We brought in researchers from practically every major part of the global economy. We asked, what are the various solutions to climate change out there? What technology do we have that is already being used today—not in a laboratory or in testing mode, but is already proven? Which solutions are scalable?

We came up with a list of about 100 solutions to climate change that met our criteria for being scalable, creating a significant level of greenhouse gas reduction, and requiring some level of investment. They were, in effect, practical solutions. Then we did some modeling to determine whether, using these 100 solutions to climate change, it is possible with only what we know and have in hand today to limit global warming to just 1.5°C—the level the International Panel on Climate Change has indicated we need to stay under.

We modeled out all those solutions and determined how much investment would be needed for each of them to scale. Then, we determined whether, collectively, they would be sufficient to reduce the emissions in our atmosphere to the extent we need. We’ve determined that we can limit warming to 1.5°C if we scale these solutions very ambitiously. It would require a lot of investment and a massive and rapid change, but it’s possible. That’s been our key message: We know how to do this and we have the tools to do it, but it needs to happen as a collective effort across all sectors of the economy.

This isn’t just solar panels or electric vehicles. It’s also areas that we don’t often think about, like walkable cities, Indigenous land tenure, and ocean life. It touches on practically every part of our economy. That means there’s something in it for everyone.

AH: Could you share some of the project’s findings and surprises, and touch on various solutions that you and your team found most promising?

JBA: One of our biggest findings was that of course, energy is a huge part of the problem. That’s why we initially thought we should focus on fossil fuel companies. Our analysis showed, however, that while the energy sector is the biggest source of emissions, the food and agriculture sector and the land use sector are about equivalent in terms of the amount of greenhouse gases they release into the atmosphere every year.

This means energy, food and agricultural, and land use are about the same in terms of how much they’re contributing to climate change. This was a huge realization for us as an organization, in that while we should keep our focus, of course, on fossil fuel companies, there are other crucial areas we should be focusing on as well. One area, for example, is reducing food waste: for instance, a third of the world’s food is never eaten. Meanwhile, the production of that wasted food and then the emissions caused by discarding that food contribute to climate change. Another area that we’re looking at right now is oceans. As it turns out, the ocean is home to a lot of climate solutions that, so far, we haven’t focused on. So, there are lots of exciting solutions out there.

We’re also focusing on solutions that have what we call co-benefits or cascading benefits for other parts of society. The climate solutions that we’ve analyzed, by and large, already exist to do something else in the world. They weren’t created to address climate change per se, but rather to help improve our cities, our air quality, and a host of other problem areas. Climate solutions are not just climate solutions; they’re also things that are good for our health, good for our cities, help improve equity, etc. We’re looking at those solutions we can highlight as multi-solvers, in that they solve more than one problem at once.

AH: Obviously, we live in a very dynamic world. How do you update these solutions and what kind of methodology do you use to continually fine-tune your assessments and discoveries?

JBA: You’re exactly right. We have an ongoing research fellow model, within which we have a roster of research fellows scattered across the globe, and they are constantly updating our models. They’re constantly doing research about new solutions in certain areas and assessing whether these meet our level of criteria or not. Then we go through a peer-review process to validate our findings.

It’s a constant process of continuing to validate our existing solutions and to update our findings. We’re always learning and asking questions. How much are they being invested? What is their current and projected impact? What challenges are getting in the way of their deployment?

We then publish the results periodically. We did a major update of our work last March, and we published what we call The Drawdown Review. This was the first major public update of our work since Project Drawdown’s initial findings. We plan on doing something similar every year or so from now on.

AH: Which industries have impressed you in the last few years, in terms of making great initiative and progress on climate?

JBA: I’ve been very encouraged by the auto sector in terms of how quickly the big auto companies are making commitments to not just reduce their emissions, but by what date they will be all electric. Also, completely redesigning the internal combustion engine is very exciting to me. The change in that sector is happening faster than we had originally predicted, at least in terms of the targets that are being set and some of the early progress made. Whether those companies ultimately meet their stated targets or not is another question, but the cost of renewable energy is decreasing so dramatically, it makes that area of solutions so much more likely to scale faster than it has in the past.

I’ve been impressed by the number of clean techs and climate tech startups that are popping up across all these sectors to jump in and say, There’s a need here, or We need to scale this solution faster; how can I start a business and help?

I’ve also been impressed by the number of entrepreneurs and startups popping up everywhere. They see a massive global need, so they are continuing to figure out innovations and solutions across practically all sectors. They are helping to accelerate progress and are demonstrating what business can do toward fighting climate change. That’s promising as well.

AH: Do you feel that’s being driven by a greater awareness and sense of the problems and opportunities?

JBA: Definitely. Look at Silicon Valley. It has had its worst wildfire seasons in the last couple of years and more acreage in California has burned in that time than at any point in its history, so climate change is hitting home for a place that signifies the heart of innovation, technology, startups, and investors. We’re also seeing a lot more investors wanting to fund climate solutions.

There is also a much greater awareness and appreciation of the enormous business opportunities around this issue. We’ve shifted a bit away from the notion that climate change can break your business toward the idea that climate change can make your business. Obviously, both are true, but the pivot that’s happening now is more toward how we can leverage the climate crisis toward economic opportunities.

AH: What’s your perspective on the role of business in fighting climate change?

JBA: I really appreciate the title of this book: How Business Can Fight Climate Change. That’s an important reframing because until very recently, I would say that the business world has largely said, How can business stop making climate change worse? That has been the guiding principle until very recently, and it took the form of How do I reduce my emissions over the next several decades to get to net zero by, say, 2030 or 2050, or some date in the distant future? Now, that’s not fighting climate change. That’s just doing a little bit less harm, a little bit at a time. That’s like releasing only slightly less emissions into the atmosphere over time. The framing of this book about how business can fight climate change is spot on. That’s the central question: how can business be a force for helping us address and draw our emissions down and out of the atmosphere? That’s an important distinction. We’re starting to have a global conversation about precisely this. It’s no longer sufficient to just say, I’m going to be net zero as a company by 2040 or 2050.

The problem with such an approach is that it only works if every company on Earth commits to and achieves the same target—but we need to achieve net zero emissions by 2050 overall, as a global community rather than individually, and the fact is that some sectors are not going to be able to change as quickly as others. So, business leaders need to be way beyond net zero by 2050 to really fight climate change.

So, going way beyond net zero, business leaders will need to ask, How can I leverage my business, business model, products, and employees, and get more involved in our communities? How can we lobby and get involved to support strong climate policy? As connoted by the title of this book, there is a need for a broader effort from the private sector in fighting climate change, instead of the old notion of emitting less over time, as has been the case so far.

AH: What are some of the areas in which business can have a positive impact on climate?

JBA: When you look at a business as a whole entity, instead of just looking at what its sustainability team is doing, you can see that companies have an effect on climate change in lots of different ways. What are the direct and indirect emissions a company is releasing into the atmosphere every year? What can be done to reduce and, ultimately, eliminate these? This is also where corporate sustainability teams focus.

Then, you have the policy side of the company, which is more about lobbying and influencing government and jurisdiction. Sometimes, the two divisions are misaligned. For instance, the company might be funding political parties that are opposing climate action or are even climate change denialists, or even the US Chamber of Commerce, which is a lobbying group largely against climate and environment initiatives and policies. It’s important that companies support climate-conscious and active politicians and political groups.

Then, where is their allocation of capital and investments going, in terms of companies funding new projects, ventures, or technologies? Are they putting funding into fossil fuels, when they should be funding renewable energies, for example? That’s another area to look into.

Another question to ask is: how are they involving their employees in issues related to their communities, and inviting them to use their skills to solve the problems of the communities they live and work in? Also, how are companies getting involved in local zoning issues that could be helping to create more walkable city streets? Another fundamental question is, of course: what are the company’s products doing in the world and what is their impact on the climate?

When we have a more open mind about how massive this crisis is, and how it requires a full 360-degree approach, we can acknowledge that companies have a lot of leverage points that they can tap into to positively influence climate change. At Drawdown Labs, we work with our business partners to try to address these areas, and make sure companies are well positioned to make a positive contribution on climate change.

AH: We always talk about best practices; conversely, what kind of corporate practices do you recommend avoiding or not doing, with respect to climate action, in spite of a company being well intentioned?

JBA: That’s a great question. It’s natural for companies to want to look at carbon removal technologies as a way to maintain their current practices. The problem with that approach is in betting on such innovations as a replacement for addressing their own internal emission levels. There’s a danger in focusing only on technology that is not proven, while continuing to put more planet-warming emissions into the atmosphere.

That’s why our recommendation is to always avoid and reduce emissions first, then to offset these with high-quality, reliable offsets second. Then, and only then, maybe invest in natural climate solutions, like carbon removal technologies and others. It’s important to get the basics right first before making bets that may or may not work. According to our analysis, specifically with regard to carbon removal, we don’t actually need a whole lot of carbon removal technology—partly given the overlap there with the need for new climate technologies.

AH: What can companies do to help increase mass awareness and capture hearts and minds around this issue, and most importantly drive climate action on both individual and institutional levels?

JBA: There’s definitely a need for more climate-related storytelling. Several of the tech companies that we work with, like Netflix, Pinterest, and Google, have platforms that they can use to shape culture and enable story sharing and create more content around climate. That’s an important lens that we need to start thinking about.

AH: What are your thoughts on the role of employees on influencing climate awareness and action within companies?

JBA: Employee influence for driving change within companies is an important lever, one that has started to get pulled much more in the last couple of years. That’s a big part of what is going to drive and accelerate climate agendas within companies.

We saw it with Amazon employees two years ago. Amazon Employees for Climate Justice is organized internally and was started by just a couple of Amazon employees who asked, What is our company doing on climate? That turned into a group of seven, which then turned into 1,000 or so employees who signed a letter to Jeff Bezos and the Amazon board. They said: here is a list of things we would like to see the company step up on, in terms of climate targets. That inside movement ended up being very successful, leading to Amazon creating their Climate Pledge, which they came up with not too long after.

It’s also starting to happen at Google and many other companies, where employees are looking at ways in which they can use their own skills to help their company decarbonize fast. It’s happening across the various departments: marketing, product development, design, manufacturing, etc. There’s also a higher level of accountability in upholding company and employee commitments to achieving their targets. It’s very encouraging to see that leading companies are embracing that transition and using their