5 ways that companies can 'Get Us There'
This article is adapted from our newsletter Energy Weekly, running Wednesdays. Subscribe here.
More than 600 investors, corporate executives and policymakers descended on San Francisco last week at the Ceres’ annual conference to discuss a key challenge: How can the private sector and investors get us to a just and sustainable economy powered by renewable energy?
For decades, Ceres has worked with businesses to make the business case for sustainability. The tone of the conference held much of the same cognitive dissonance of broader clean energy conversations: excitement about the surfeit and the economics of climate solutions, with undertones of fear that we aren’t transitioning fast enough.
After spending two days attending sessions, talking with exceptional professionals and processing inspirational stories, five key business lessons stood out to me that have a great deal of relevance for the transition to clean energy.
1. Long-term problems demand long-term planning.
Shareholders and boards put far too much emphasis on the next quarter and too little on the longevity of organizations. Responding to environmental risks requires the private sector and capital markets to invest both in long-term and smaller projects. Such is the case with distributed energy; despite economics being competitive, investors tend to not want to bother with projects that are so little. Backing distributed installations doesn’t mean you need to forgo growth and returns. In fact, quite the opposite; it means you are ensuring returns into the future.
2. The flip side of risk is opportunity.
Businesses are facing real climate risks that will affect the bottom line. Disruptions in supply lines, for example, could hit the economy hard if left unchecked. Yet within these risks lie business opportunities, and many companies and investors are working to figure them out and then capitalize off them. That could mean new innovators creating the microgrids that protect companies from outages during extreme weather or it could be building clean energy projects through Opportunity Zone funding, a tax incentive to support projects in low-income neighborhoods.
3. This is personal.If your organization isn’t considering how to transition to clean energy sources, you aren’t doing your part — and that means you might be caught flat-footed.
There’s a tendency in business and finance to want to bifurcate out values. But the impacts of climate change are felt at a human level — from wildfires to flooding to the disappearance of your favorite ski destination. Remember that responding personally isn’t a weakness; it’s an opportunity to add purpose to your work and workplace. Aligning with sustainable business practices means putting your money where your mouth — and heart — are. In the words of Salesforce CFO Mark Hawkins, the values of an organization determine long-term success. If your company has international operations, for example, procuring renewable energy abroad could help open clean energy markets in emerging economies.
4. This isn’t an environmental strategy, it’s a business strategy.
Risk analysis isn’t new; this is what company leaders do. They recognize future risks and opportunities, and alight strategies accordingly. What is new is the recognition of climate change as one of the risks for which to plan. If your organization isn’t considering how to transition to clean energy sources, you aren’t doing your part — and that means you might be caught flat-footed.
5. The private sector needs to redefine business-as-usual.
There was a notable absence at the conference: everyone who isn’t on board with addressing climate risks in their companies. Many businesses and investors who attended the Ceres gathering this week are just now considering climate risks and what that means for operations — and these are the folks who are ahead of the curve. That means we have a lot of work to do. We need to communicate to our boards, our employers, our investment managers and our politicians that the clean energy transition is something that matters to us. So it should matter to them.
The bottom line: There is great risk in the unknown. Transitions are hard. But if they are done right, businesses can survive, thrive and prosper.