The Business of Business is Climate

The climate is telling us something’s wrong. Business is starting to hear the message. U.S. Steel, Ericsson, and other companies are changing, and finding new ways to work with environmentalists.

Karachi, Pakistan after recent downpours led sewers to overflow.

How bad does it need to get? As we at Techonomy prepped for our recent conference on business and climate, we talked to businesspeople of all sorts, as well as climate scientists, environmentalists, and investing experts. As we did, global weather was in a historic tailspin which certainly is just the tip of a melting iceberg yet to come. Tens of millions of Pakistanis are fleeing still-rising waters. A heatwave with no precedent afflicts much of Western China. Europe had its hottest summer in history. And the Yangtze, Rhine, and Colorado rivers are all drastically lower than in memory. 

Across the U.S., we’re feeling it strongly. Temperatures recently broke 100 degrees fahrenheit in Palo Alto, the center of our old world, back when we thought the internet was the most important topic. (And it hit 116 in Sacramento.) And in just a hint of the kinds of second-order effects that are likely to begin afflicting more and more of us, 200,000 residents in predominantly-Black Jackson, Mississippi were without safe water after floods devastated the city’s infrastructure – an example of what some are calling “environmental racism”. 

Yet the world proceeds on its blithe course. It continues to be considered, at least in the U.S., acceptable discourse to deny that global warming is caused by humans. Some states, notably Texas and Florida, are actually trying to punish investment firms that take global warming seriously. And just about all of us still behave as if things are basically the way they’ve always been. We drive our guzzlers, we keep buying things we don’t need. Many of us still fly around, even though that is generally how individuals contribute most to climate-warming emissions. 

It feels heartening, on a day to day basis, when we talk to people like Rich Fruehauf, chief strategy and sustainability officer at U.S. Steel. Contrary to what many might expect, that company is taking extensive steps to reduce emissions. Steel is a big contributor to global warming–some estimates suggest the industry contributes up to 8 percent of global CO2. But we need it for the green transition, for electric infrastructure, charging stations, new utility transformers, and transmission lines, not to mention e-vehicles. Did you know that two-thirds of American steel mills now use “electric arc furnaces”, which create only one-quarter the greenhouse gasses that traditional blast furnace steel plants do? Such electrically-powered plants produce new steel from recycled scrap—old cars, washing machines, and the like.

Another speaker who gives us hope is Heather Johnson, chief sustainability officer at telecommunications giant Ericsson. It’s had active work in this area for well over a decade, and is committed not just to “net zero” emissions by 2040 in all its operations, but also in the use of its products by customers. We had a good conversation in our prep call about how that sort of ecosystem pressure will generate reductions across supply chains, as companies of all sorts, we hope, adopt increasingly-stringent goals. (A similar conversation emerged in our recent virtual roundtable on carbon accounting–it’s worth watching.)

Speakers at the conference were enthusiastic about the just-enacted U.S. Inflation Reduction Act, which this crowd more often thinks of as the “Carbon Reduction Act,” even though they wish it had done much more. The bill allocates a historic amount of federal dollars for climate tech and climate action. Among many follow-on benefits is that investors will gain reassurance that climate-friendly corporate actions will be profitable. Climate tech companies will also see prospects brighten as their products and services find larger and more reliable markets.

We need systems thinking to address our interlocking crises, and there’s not enough of it. One entire session at the conference focused on that, with speakers from our partner Deloitte as well as Citi and environmental group RMI. And Elizabeth Sturcken, who heads the EDF+Business program at the Environmental Defense Fund, another of our partners, interviewed authors of the important recent book Speed & Scale: An Action Plan for Solving our Climate Crisis Now

But there’s just so much to do, and still not nearly enough being done. It’s the inevitably slow pace of emissions-reduction progress, alongside the quickening pace of climate degradation, that is most disturbing. And the challenge is made dramatically greater by the fact that well over half the planet remains justifiably intent on accelerating their pace of economic development. It is not just incongruous but also unethical for us to live the way we do while billions have so little power or water or infrastructure. As we steadily reduce the global inequality gap, which we must, we and they have to find ways for those billions to improve their standard of living without concomitant increases in emissions. 

If we don’t, and don’t simultaneously reduce our own developed-world carbon footprint, the prognosis is unbelievably grim. Temperatures will increase considerably from here anyway, no matter what we do. We’re barely past one degree celsius over historic levels so far, and even major emissions reductions will likely not keep us to less than two degrees in coming decades. That’s one reason a recent study calculated that, as a Guardian headline put it, “Major sea-level rise caused by melting of Greenland ice cap is ‘now inevitable.’” And Bill McKibben points out this week in his superb newsletter that weather extremes grow worse exponentially–not linearly–as temperatures go up.

Our conference was all about the ways this complex and scary set of realities must transform the conduct and nature of business globally. We’re happy to have been able to bring together not just the speakers we’ve mentioned but also pioneers like Eileen Fisher and newly-passionate business thinkers like Seth Godin. It’s just the beginning of a transformed economy. We hope.

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