2016 was the year that…
2016 was the year that…
What a long, strange trip it’s been.
And while we’re paying homage to the Grateful Dead, the year just ending felt like a drawn-out jam session, the melody of which seemed elusive at times — and the finale a cacophonous mash-up of voices that transcended logic and common sense. Like the Dead concerts of yore, the past 12 months brought bright, buoyant melodies punctuated at times by metaphorical train wrecks, breakdowns and more than a few twists and turns.
Many of us are quite happy to keep truckin’ on to a new year.
And yet 2016 had its better moments. Viewed through the lens of sustainable business, it was more of the same — "more," in this case being a continued acceleration of activity across a steadily expanding landscape of opportunity.
Lest we forget, here, in no particular order, are 10 story lines we covered during the year that showed the promise and progress of sustainable business.
The Paris Agreement became actionable
The notion of a "post-Paris world" took shape, as countries and companies dug into the nitty-gritty of what they must do to meet the goals set forth by the pact inked at COP21 in late 2015 by 196 countries. The agreement was formally signed by more than 150 of those countries by September, surpassing the threshold for ratification, the fastest of any international agreement in history.
For the private sector, one focus was on moving past the usual suspects of climate leadership to a much broader field of companies large and small. Corporate coalitions like We Mean Business pointed out the vast wealth to be created in the transition to a low-carbon economy — at least $13.5 trillion, according to one analysis. In other words, real money. The burning question, of course, is whether the political change in leadership in the U.S. will alter this course — and should America backtrack on climate commitments, whether it will cause other nations to do so, too.
Autonomous vehicles got rolling
The notion of self-driving vehicles, not very long ago an audacious fantasy, picked up speed during 2016, as car makers and mobility companies such as Uber and Lyft rolled out prototypes and pilot programs. This uncharted territory is roiling regulators and causing city planners to ponder what happens when all these driverless vehicles hit the roads? Will it lead to a promised decrease in urban congestion, reduced road-building costs and fewer parking lots and garages?
Tech impresario Elon Musk’s latest "master plan" gave autonomous vehicles a starring role, and not just for cars. His vision included autonomous buses, summoned by phones and hailed at traditional bus stops. Where will all this leave millions of truck, bus and cab drivers — not to mention all those newly minted Uber and Lyft drivers? It remains to be seen whether these technologies will be a net-positive to people and the planet.
Leadership companies increased their lead
Companies have been upping their sustainability commitments, particularly as they near the end of five- and 10-year cycles. 3M, AT&T, Avery Dennison, BASF, Dow, Pepsico and Pratt & Whitney were those that set 2025 sustainability commitments and goals. Walmart laid out a series of goals for 2025, including achieving zero waste in its facilities in Canada, Japan, U.K and the U.S., and to be powered by 50 percent renewable energy sources.
Meanwhile, Interface, the floorcovering innovator, laid out a series of goals under the rubric Climate Take Back that looks well beyond 2025, including making "factories that are like forests" and transforming "dispersed materials into products and goodness." It bodes well for continued progress, without and even in spite of the lack of political leadership.
The circular economy got real
The business world may still be getting its collective arms around what it means to have a "circular economy," but the term already is resonating among a clutch of leadership companies, and has moved from a meme to a market. At GreenBiz 2016, the CE 100 USA was launched, a spinoff of the Circular Economy 100 created by the Ellen MacArthur Foundation.
The year saw a flurry of developments, from research (the circular economy as a $1 trillion opportunity), aspirations (circular buildings, circular cities), innovative apps and startups, logistics, investments and, notably, efforts by companies to build new circular models. Is this truly the future? It’s too early to tell. Many companies still view "circular economy" as a synonym for "recycling," although that’s only part of the picture. Still, the trend is encouraging, not merely because it brings a systems view to companies’ value chains and sustainability efforts. And it is just getting going.
Ocean plastics joined the supply chain
If the circular economy is about keeping materials (among other things) in circulation, it has created a sea change in thinking about plastics — how they’re made, how they’re used and what happens after that. One bright spot has been reclaiming plastic waste from oceans and putting it back into production. What seemed a parlor trick just a few years ago is now being seen as a business opportunity. Coca-Cola, Dow, Interface, Method, even Tiffany have begun mining the seas for use in their supply chains. It’s not yet cost-effective in many cases, at least compared to using virgin or curbside-recycled soda bottles.
But there are social benefits to consider, especially in developing economies. Interface, for example, created Net-Works, which hires locals in the Philippines and other countries to collect abandoned nylon fishing nets, which litter the landscape and ocean, harming coral reefs and other ecosystems. Such efforts were given new urgency by a 2016 report from a World Economic Forum/Ellen MacArthur Foundation study stating that by the middle of this century there will more plastic than fish, by weight, in the world’s oceans. Will companies see that as potential revenue swimming away or a new resource to be mined? The coming year will determine whether the tide really is turning.
Community solar shined brightly
Until recently, "going solar" meant installing rooftop panels on a home or business. But that left a lot of households and companies out of the picture — for starters, roughly 85 percent of U.S. households, according to a 2014 estimate. Enter community solar, a means of sharing solar installations among multiple customers or buildings that seemed to take hold in 2016, as customers bought into solar installations constructed nearby or elsewhere, and received credit on their utility bills for the power their panels generate.
Community solar is seen as one of the great growth opportunities for renewable energy — at least in the 14 states and District of Columbia that have community solar laws. (At least 24 utilities in other states voluntarily offer such programs.) It may even be a utility savior, helping to stem the tide of customer defections from the grid to distributed energy resources. Such schemes also allow a multitude of others — cities, counties, nonprofits (like Groundswell, run by a former White House official), hospitals and others — to enter energy markets while making solar affordable to a wider range of customers, including companies. That’s a shining example of bottom-up leadership — and green power for all.
Coal became less relevant
"The death of coal" has been a longtime dream of environmentalists, and for years — decades? — that dream has seemed a far-off fantasy. But market forces, notably the rise of natural gas fracking and dropping prices for renewables, have made coal uneconomical, at least in the United States, especially when you factor in the costs of air pollution and greenhouse gas emissions. During 2016, a parade of coal companies went bankrupt, roiling an industry already taking its lumps from low prices and tightening environmental regulations. Governments from China to Oregon took steps to transition to low-carbon fuels, limiting coal or banning it altogether.
One big question is how to transition coal miners to other jobs. It’s not an easy fix, given that coal country often lacks other opportunities that pay a living wage. It’s unclear, for example, whether coal workers can transition to solar installation and other clean-economy jobs. But one thing is certain: Renewable energy provides far more jobs than fossil fuels, such as oil and gas extraction and coal mining. That bodes well for the economy — if policy and politics can ensure that old-energy workers can find a place in the new-energy economy.
Energy productivity emerged as a market
Overall, energy use is falling per unit of gross domestic product, a sign that economic growth is having less of an impact on climate change than in the past. In other words: Energy efficiency is finally having its day in the sun. Except that the new term is "energy productivity," reflecting energy’s role as a resource to be harnessed, not just minimized. Doubling energy productivity in the U.S. alone will save $327 billion annually in power bills, create 1.3 million jobs and cut carbon dioxide emissions by 33 percent by 2030, according to the Alliance to Save Energy.
A massive market awaits, particularly in the built environment. The market for energy productivity in commercial buildings is about $72 billion in the U.S. alone, according to the Institute for Market Transformation. There are structural barriers, from a dearth of financing to building owners’ skepticism that retrofits will deliver promised returns. But such challenges can be overcome, and the growth of information technology, especially the Internet of Things, is helping make efficiency and productivity ever more accessible. One encouraging sign: Energy efficiency and productivity topped the G20 agenda for 2016, thanks in part to leadership from China. That should help unlock capital markets.
Pollinators became a business issue
One other long-discussed issue got traction during 2016: the plight of the bees and other insects collectively known as pollinators. The use of pesticides and the vicissitudes of climate change have wreaked havoc on bee populations. For years, what was viewed as a "nature problem" is finally being seen as a business issue — and a critical one at that. Industrial agriculture employs only a handful of pollinator species to sustain it, mostly honeybees and bumblebees that are toted from farm to farm to provide pollination. But as pollinator declines over time, the current estimated economic impact is about $186 billion a year.
A major cause of pollinator decline is a class of modern chemicals known as neonicotinoids, but many solutions are very, very old, such as protecting the biodiversity bee populations need to flourish. Companies are also banding together to create agricultural standards that support bee habitats and are using a variety of other techniques to keep hives buzzing. There are growing efforts to make these issues top of mind to boards of directors, who have been slow to embrace the challenge. As John Elkington notes: "CEOs and presidents alike will find that the environmental destruction they presided over has unimaginably powerful ecological, economic and political stings in its generations-long tail."
Corporate renewables procurement got organized
Companies have been buying renewable energy for years, but in 2016 they finally got organized. Longtime collaborators such as BSR, Rocky Mountain Institute, World Resources Institute and World Wildlife Fund forged the Renewable Energy Buyers Alliance, with the aim to inspire 60 gigawatts of clean energy available to corporate buyers in the United States by 2025. REBA joined several other groups seeking to accelerate corporate renewable purchases, and the collective push seems to be working. During the year, Amazon struck a landmark deal with one of its major utilities, Google said it was on track to hit its 100 percent renewables goal in 2017, and everyone from Etsy to Lockheed Martin was getting in on the act. And it’s not just the usual suspects: First-time corporate buyers dominated the market last year.
Companies are finding it a good time to make the move to solar, thanks to ever-dropping prices. And as the price drops, the options grow, whether on-site generation or virtual power purchase agreements, among a growing array of energy procurement mechanisms, including ones suitable for smaller companies. Emerging energy storage technologies are expected to make the economics of corporate renewables even more favorable. But companies aren’t waiting, with a few ambitious companies parting ways with their local utility, as MGM did in 2016 in Las Vegas, or even starting their own, as Apple set out to do in 2016. That’s likely to give energy companies a jolt.
There’s more good news where that came from, from growing corporate action on the Sustainable Development Goals to the growth of innovative corporate water strategies to increased company engagement to build sustainable and resilient cities.
It was, in the end, a pretty good — albeit long and strange — year.