It’s been an amazing 12 months in the world of sustainable business. From climate change to inequality, the scope of humanity’s biggest environmental and social challenges came into much sharper focus this year — as did the scale and range of opportunities to do something about them. And citizens, using new social media tools and old-fashioned marches, rose up to drive change. Both in response and pre-emptively, the world’s leading companies continued to aggressively pivot their businesses toward more sustainable and innovative ways of operating.
To make sense of all of this activity, I made a list of the year’s big themes, looking for the bigger story across multiple examples. But I also ran across a few specific company stories that were just really compelling or cool. So here is my admittedly subjective look at the top 10 sustainability stories and themes of the year, with sustainability broadly defined as encompassing people, planet, and profits:
1. The bad news — climate change is now.
The subtitle of this year’s summary could be “reports, reports, reports,” with important and fascinating (no, really) studies from economists, government agencies, scientific bodies, and business coalitions — all making a compelling case for action on climate change.
Over the last two years, the Intergovernmental Panel on Climate Change issued its fifth, multi-thousand-page assessment of global climate science. But some new, more layman-friendly voices are telling the science story and explaining how costly to business a hotter world already is. The American Association for the Advancement of Science (AAAS) issued the clearest document from scientists I’ve ever seen, a pithy report telling us that “What We Know” is the following: (1) “Climate change is happening here and now,” (2) the risks of irreversible, highly damaging impacts are high, and (3) the sooner we act, the lower the cost. Another report, the U.S. National Climate Assessment, led with the statement that climate change “has moved firmly into the present.”
Adding a business perspective, a group of heavy hitters, including billionaire Michael Bloomberg and former U.S. Treasury Secretaries Hank Paulson and Robert Rubin, issued the persuasive Risky Business Report. This short paper outlines how climate is “already costing local economies billions” and describes how hundreds of billions of property are at risk.
2. The good news — tackling climate change is getting much cheaper.
Two impressive pieces of analysis made the case that moving to a clean economy is profitable – both for society and for the private sector. At the macroeconomic level, the New Climate Economy report (issued by a group of CEOs, leading economists, and former country presidents) challenged the persistent, but incorrect, view that we have to choose between expanding prosperity for billions of people and protecting our shared asset base (that is, Earth and its climate). A key point: in a world that will spend $90 trillion on infrastructure over the next 15 years anyway, the additional costs to shift that build-out to a low-carbon path, with technologies we already have, will be minimal.
Second, a new coalition representing many of the world’s largest companies launched in September under the name We Mean Business and issued its own powerful study, offering substantial evidence of the direct business value of investing in low-carbon tech and energy efficiency.
But company coalitions aren’t just issuing reports — they’re making promises in line with the rapidly improving economics of renewable energy (which utilities can now obtain in many regions at prices below fossil fuels). An offshoot of We Mean Business, the RE100 group — which launched with founding members including Philips, Nestle, Mars, Swiss Re, and IKEA — committed to using 100 percent renewable power. Unilever U.S. also committed to 100 percent renewables by 2020 (Disclosure: I’m on advisory boards for both RE100 and for Unilever U.S.). A deep shift in how we generate and use power has begun.
3. The utility and energy businesses are changing fundamentally (well, some of them are).
It’s hard out there if you’re a utility. Distributed generation (meaning solar panels on my roof) is a direct threat to the business models of the large power plants that utilities know best. And investors are noticing: in May, Barclays bankdowngraded the bonds of the entire U.S. utility sector. Seeing the writing on the wall, German utility E.On is spinning off its fossil fuel-burning assets and choosing to focus on renewables. In the U.S., the utility NRG – which gets the vast majority of its power from fossil fuels — set some remarkable public goals, committing to cut carbon emissions by 50% by 2030 and 90% by 2050.
But the old guard of the energy business made it clear that they aren’t planning to change. Exxon (and Shell) issued statements to answer concerns about their assets and reserves becoming worthless or “stranded” as the world moves away from fossil fuels. Exxon’s memo in particular is a thing of twisted beauty, daring the world to regulate the company and saying to investors, in essence, “nothing to worry about here, move along.” But the Bank of England begs to differ, saying that the “vast majority of reserves are unburnable.”
4. Serious legislation like a carbon tax — even in the U.S. — is seeming possible again.
The NGO Ceres has gotten an impressive array of companies to sign onto the Climate Declaration, which states that climate change is both a threat and a major economic opportunity. But this year, a smaller Ceres group, BICEP, which is calling for more aggressive policies like a tax on carbon, added some very mainstream companies such as General Mills, Kellogg’s, and Nestle (perhaps not coincidentally, General Mills announced early this year that its earnings were reduced by extreme weather).
BICEP was joined in its call to price carbon by the institutional investors, 1,000 companies, and 70 countries that signed the World Bank Price on Carbon, and even by Goldman alum and Republican Hank Paulson, who penned a surprising op-edcomparing climate change to a financial bubble. Adding to the momentum, Google publicly cut ties with climate-change-denying lobbying group ALEC, saying that the organization was lying about the science.
Regulatory and executive branch actions also made waves this year, especially in the U.S. and China. President Obama’s EPA issued new rules on carbon and coal and new ozone pollution regulations. And China took serious action, setting a cap on coal emissions by 2020, which will help it reach the goals of the carbon agreement with the U.S. (a pact that’s not good enough to match what science tells us, but monumental just the same).
5. A powerful social movement on climate takes shape.
My family and I joined hundreds of thousands of people at the climate march in New York City in September. We were little cogs in a 162-country, 2,600-event public cry for global action. While the march was too anti-business to be as unifying a rallying cry as it should’ve been, it still signaled a major societal shift.
Another arm of this growing social movement, led by 350.org, has been the campaign to divest university and institutional funds from the fossil fuel industry. This campaign got a major symbolic boost when the Rockefeller Brothers Foundation — which can trace its money back to the original oil titan John D. Rockefeller — said it would divest from fossil fuels.
READ THE REST AT: https://hbr.org/2014/12/the-10-most-important-sustainable-business-stories-from-2014
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