{"id":627886,"date":"2023-04-11T03:30:00","date_gmt":"2023-04-11T08:30:00","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/04\/11\/the-alchemy-of-turning-big-challenges-into-big-opportunities\/"},"modified":"2023-04-11T03:30:00","modified_gmt":"2023-04-11T08:30:00","slug":"the-alchemy-of-turning-big-challenges-into-big-opportunities","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/04\/11\/the-alchemy-of-turning-big-challenges-into-big-opportunities\/","title":{"rendered":"The alchemy of turning big challenges into big opportunities"},"content":{"rendered":"
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[GreenBiz publishes a range of perspectives on the transition to a clean economy. The views expressed in this article do not necessarily reflect the position of GreenBiz.]<\/em><\/p>\n<\/div>\n

Last month, I had the pleasure of participating in the Aspen Institute\u2019s climate conference<\/a> in Miami. It\u2019s always a good event, but this year was a particularly opportune moment to survey the landscape and assess where things stand when it comes to making progress against various environmental challenges. It had me really appreciating companies such as BP as climate innovators. That may sound strange but hear me out.<\/p>\n

Two things stood out to me:<\/p>\n

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  1. We\u2019re at an inflection point.<\/li>\n
  2. Audacious private-sector-led environmental problem solving is pivotal for leading the way forward.<\/li>\n<\/ol>\n

    What do I mean by inflection point? I mean that looking back, we\u2019ve come a remarkable way. But looking ahead, there\u2019s still quite a distance to travel.<\/p>\n

    In terms of how far we\u2019ve come, it\u2019s remarkable how ESG has gone from outlier to mainstream. ESG practices are well understood and widely practiced. Most leading companies now measure and report transparently on their ongoing efforts to achieve positive outcomes on ESG scorecards. This is a big deal and a very positive development.<\/p>\n

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    Let\u2019s be honest with ourselves: Continuing down the current path won\u2019t save us.<\/p>\n<\/blockquote>\n

    To be sure, there remains some noisy political pushback against ESG. But it won\u2019t cause companies to lose momentum in my view. Business leaders have figured out that strong ESG practices make good business sense, period. Smart business leaders also realize its best to keep ESG disclosures straightforward and business-like, as we have been advising, to avoid distractions and controversies about so-called “wokeness.”<\/p>\n

    Let’s acknowledge and thank the many people who deserve credit for ESG\u2019s progress to date: activists and advocates, forward-leaning business leaders, institutional investors, politicians (and their staffs) who worked hard for various bills that meaningfully support business progress (particularly the IRA), and “ordinary citizens” \u2014 the students, employees, customers and shareholders who demanded more.<\/p>\n

    But let\u2019s also be honest with ourselves and each other: Continuing down this path won\u2019t save us. The 2023 IPCC report, released last month, is devastating. It issues a “final warning” that without swift and drastic action, we are on track for irrevocable damage.<\/p>\n

    The climate time bomb is ticking.<\/p>\n

    While we\u2019ve made gains against most of the big environmental challenges we face, they are clearly insufficient. Absent some totally unexpected arrival of game-changing public policy, we need business to go way beyond checking the box on ESG scorecards.\u00a0<\/p>\n

    We need leading companies to think very big and transform their business models so that the outcomes we need happen fast and at scale.<\/p>\n

    What does this look like?<\/h3>\n

    Fortunately, we have some encouraging examples:<\/p>\n

    1. <\/strong>Ford’s big bet on making the F-150 pick-up truck \u2014 the best-selling vehicle in America over the past 40-plus years \u2014 an EV. <\/b>Yes, Ford is drawing on the example of others \u2014 Tesla of course, but also the recent quick start of Rivian and other EV makers. But Ford is arguably doing something more significant. Starting with its best-selling product, it\u2019s transforming the company’s entire way of doing business from climate-damaging based on internal combustion engines to electric.<\/p>\n

    It’s clear that this move is not easy as Ford confronts supply change obstacles and other challenges. But it\u2019s great to see Ford steadfastly pushing both its customers \u2014 who are generally neither climate hawks nor early adopters of new technology \u2014 as well as its investors to support this big move.<\/p>\n

    2. <\/strong>BP\u2019s pursuit of green hydrogen and other climate-friendly initiatives. <\/b>Those paying close attention might protest that BP has been in the news a lot recently (and getting a lot of flack) for scaling back some of its renewable energy goals. But I think the critics are missing the bigger point. The company is still boldly pursuing transformation. They are making a huge bet on green hydrogen and a less dramatic but still important bet on EV charging, among other new green initiatives. The controversy over the speed of BP\u2019s transition away from oil shows just how daunting such transformations can be. BP is balancing demands from activists, on the one hand, who want much more green investing; and shareholders, on the other hand, who want much less. By the way, note the sharp rise in share price since BP\u2019s recalibration.<\/p>\n

    We shouldn\u2019t expect it to be easy for business leaders to get this balance exactly right at every step of the way. Activists are right to keep applying pressure for change, but we need to accept that business leaders must be mindful of their owners\u2019 preferences. I expect more back and forth like this as companies try to figure out how best to achieve big positive outcomes in ways that work for as many stakeholders as possible.<\/p>\n

    3. <\/strong>Google\u2019s effort to run itself with clean energy 24\/7\/365. <\/b>Thanks to their very transparent disclosure, we know how difficult it is for the company to achieve this. And many of the company’s peers, including Microsoft, Apple and Amazon, have similar hugely ambitious plans to ramp up their direct investments in clean energy. This is transformative stuff.<\/p>\n

    Environmentalists were appropriately very positive when the draft of President Joe Biden\u2019s infrastructure\/climate bill included the so-called CEPP, which aimed for rapid increases in the amount of renewable energy available in the grid. Unfortunately, there was insufficient political support for that measure. The next best thing is for these giant data center companies to just do it on their own. What I expect next is that these companies will work with NGOs to simultaneously address the concurrent need for positive biodiversity and community outcomes to accompany such transformative investing.<\/p>\n

    Despite the best efforts of even the biggest companies, sometimes the necessary business action is too much for any single company to handle on its own. That’s where bold new partnerships can step in\u00a0<\/p>\n

    For example, the Frontier fund<\/a>, which committed $925 million to support startups that remove carbon directly from the air. Here, Alphabet, Shopify, Meta and McKinsey are teaming up to do something at scale that, given the unfavorable economics of direct carbon capture today, would be difficult for any one of these companies to do at scale individually. Teaming up like this makes it easier to take on critical but economically daunting opportunities.<\/p>\n

    Another example like this is United Airlines\u2019 new fund to invest in companies pioneering sustainable aviation fuels, where it\u2019s teaming up with JPMorgan, GE, Honeywell, Air Canada and Boeing.<\/p>\n

    So where are the biggest opportunities for impact?<\/h3>\n

    Let\u2019s start with the biggest challenges. Here are a few where we believe bold business leadership can result in the scale of change we need:<\/p>\n