The US government’s newly passed Inflation Reduction Act will direct $370 billion toward advancing renewal energy and reducing greenhouse gas emissions—the country’s largest investment in fighting climate change so far.
As business and government leaders around the world gathered in Egypt this week for COP27, the 27th annual United Nations Climate Change Conference of the Parties, Working Knowledge asked faculty members affiliated with the Business & Environment Initiative: What should business leaders do to seize this historic moment?
Here’s what they said:
Rebecca Henderson: Set reduction targets and keep pushing forward
“Set an emissions reduction target. And if they have already done that, set milestones on the road to that target. And if they have already done that, make sure that the company is clearly on track to meet these milestones. And if they have already done that, explore what can be done within their industry to reduce emissions together.”
Rebecca Henderson (@RebeccaReCap) is the John and Natty McArthur University Professor and author of Reimagining Capitalism in a World on Fire.
John Macomber: Evaluate investments based on long-term benefits and risks
“Business leaders should press to ensure that the $369 billion allocated to energy security and climate change investments is truly allocated to investments. That means expenditures with a long-term benefit toward a specific return objective and not toward speculative technologies or to one-time, zero-ROI grants for past flood or fire damage.
For instance, upgrading transmission lines for electricity and pipelines for the fossil fuels that consumers still demand accomplishes energy efficiency, increases energy security, reduces risk of fire and spills, and pays back for decades.
More specific to climate change mitigation, business leaders could propose that some Inflation Reduction Act (IRA) funds go into low-interest, junior loans. They could go toward otherwise financially borderline energy efficiency (and carbon reduction) projects in transportation, power generation, and home heating that would then attract supplemental private capital so together, deals are completed that otherwise would not be done.
It appears that there will be increasing peril from wildfire, river flooding, drought, and extreme heat. Business leaders can model capital investment that reduces risk from those perils in their own real property and infrastructure portfolios—so that federal, state, and local governments can then use some of the IRA money to fund interventions that are shown to work. To illustrate, these last investments might turn out to be fireproofing, house elevating, water reuse, or white roofs and cooling centers respectively.”
John Macomber (@cleantechcities) is a senior lecturer and co-author of Healthy Buildings: How Indoor Spaces Drive Performance and Productivity.
Rosabeth Moss Kanter: Get involved at the city level
“Metropolitan regions are increasingly at the forefront of climate action. They house a large proportion of the population, face costly threats from climate-related disasters, and consume 78 percent of the world’s energy and emit 60 percent of the world’s greenhouse gases, according to UN estimates. Yet, in my studies of climate action in US cities, business leaders are largely missing from the pledging, planning, and execution of local and regional climate goals.
Most cities can point to some business actions: parking lot EV charging stations or shared bicycles, rooftop gardens or ground level trees, wind power turbines, flood-proofing, and the like. But they tend to be isolated one-off examples with limited impact. If enlightened leaders join forces, their collaborations can stimulate innovations, create new markets, or push government to accelerate infrastructure projects, some of which already have funds allocated.
Coalitions with business leadership are vital to encourage the most innovative and help the most vulnerable. Climate tech startups need support from established companies—for testing sites, referrals, and partnerships—to enrich the ecosystem and enable more solutions to grow, whether energy efficient technologies or inventions that directly capture and store carbon.
At the same time, coalitions should include advocates for climate justice to ensure that areas most vulnerable to climate disasters, where residents tend to be Black and Latinx and have low incomes, can access affordable renewable energy, building upgrades, and electric buses. This can also help businesses meet diversity, equity, and inclusion goals by enlarging employment pools.
Business leaders must think outside their own buildings to the communities that make their success possible. To get the most impact from climate investments requires not just concrete infrastructure but an infrastructure for collaboration.”
Rosabeth Moss Kanter (@RosabethKanter) is the Ernest L. Arbuckle Professor of Business Administration. Her latest book is Think Outside the Building: How Advanced Leaders Can Change the World One Smart Innovation at a Time.
Peter Tufano: Turn pledges into reality
“COP27 has been called ‘The Implementation COP,’ which seems particularly apt for a business community that prides itself on action. Given our rapidly depleted global carbon budget, this is indeed a decisive year in a decisive decade.
Globally, we need to develop new technologies to slow and reverse greenhouse gas emissions. Fortunately, in the US, the IRA provides substantial incentives and de facto industrial policy to do so. We have to turn our net-zero pledges into reality. While many companies have made pledges in good faith, implementation plans are still mostly poorly formed.
Recent Edelman research suggests while the public thinks that business can have a big impact on climate, 64 percent of people in 14 countries think that business is ‘mediocre or worse’ at keeping our climate promises, with coal, private equity, fashion, fast food, and oil and gas judged least likely ‘to do what is right in addressing climate change.’ We will build trust if we turn our words into deeds.
Finally, my own work looks at climate alliances; increasingly we must find new ways of collaborating. Our rival is not our competitor, our enemy is not the government—our common foes are the forces we have unleashed that threaten the future of the planet.”
Peter Tufano (@peter_tufano) is a Baker Foundation Professor and Senior Advisor to the newly created Harvard Salata Institute for Climate and Sustainability.
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