Doing business in a post-Paris world

Power Player

Doing business in a post-Paris world


When I was a young boy, way back in the 1960s, it was very common driving down the nation's newly built interstate highways to see a can or bottle or even an entire bag of garbage come flying out the window of the car in front of you. Our highways were paved with litter. Today, no longer.

Societal norms can change and, once the change starts, it can come quickly and completely. The key is to get the ball rolling.

Change in environmental behavior, at least, usually require a catalyst, a negative event arising as a consequence of the bad behavior (such as the Cuyahoga River — not too far from where I lived at the time — catching on fire in 1967) or as a result of the government's casting a spotlight on societally antithetical behavior. Lady Bird Johnson's "Highway Beautification" campaign was instrumental in solving the highway litter problem by setting a new environmental norm.

Behavioral norms apply to corporations as well, particularly big consumer-facing firms. Far from being indifferent to what their peers are doing, big corporations are constantly playing "keeping up with the Joneses" in every aspect of their endeavors including, increasingly, sustainability practices. Best practices quickly become the behavioral norm for big corporations. Some will lead, others will conform, but none will allow themselves to be left behind.

This is why, I believe, the agreement reached in Paris — coupled with the U.N.'s Sustainable Development Goals adopted in September — are hugely important. Their impact will be felt, very quickly, on corporate behavioral norms. The best companies are already moving to adopt the SDGs as their guideposts, to embed them in their corporate core values and to use the Paris Agreement as a catalyst to a higher level of corporate commitment on climate.

We are on the cusp of an era where, quite simply, it no longer will be acceptable for prominent corporations to be indifferent to sustainability in their energy consumption, knowing as we do that even the quiet acquiescence represented by a decision to rely on power from the grid represents the passive acceptance of a product that in all likelihood was over 70 percent produced by carbon-emitting fossil fuels (coal and natural gas).

Clean-energy space race

This change in corporate behavior already is well in motion in select industries. Google, Apple, Amazon, Facebook and Microsoft are engaged in a "space race" not only to build the biggest and best data centers but to make sure that they are powered to the fullest extent possible by clean energy. European corporates, led by the likes of IKEA and Unilever, are pushing hard to "go zero" on carbon by embracing "high quality" (as in not RECs) renewable energy wherever and whenever they get it.

The traditional power industry, worldwide, would do well to pay heed to Unilever's recent announcement that, by 2030, it no longer will accept any coal-fired generation worldwide. It is a harbinger of a corporate norm to come.

The vastness of major multinational corporations today and the real estate they occupy — their countless (solar-ready, flat-roofed) factories, warehouses, distribution centers and retail outlets — represents a huge opportunity and potentially major impact on the nation's energy supply balance. If you think of American electricity consumption today as being roughly one-third each residential, industrial and commercial, the prospect of the country's commercial load going almost entirely off grid, beyond the meter and primarily solar, is a game-changer.

The new urgency of this Paris-catalyzed trend will prompt a shift in how big companies implement their energy decisions. Today, for most companies, energy decisions are made locally, deep inside the procurement department. The need of major corporations to get ahead on this issue will compel corporations to adopt a centralized programmatic approach to comprehensive solarization programs. These programs will be implemented across a company's entire national if not global footprint, using corporate credit and integrated master planning: thousands of construction sites, financed, procured and installed, in the most time-efficient and cost-effective way.

These portfolio solarization programs will be akin to the cell phone tower buildout of the 1990s, but in this case, done across every industry, with each player looking over its shoulder to make sure it does not get behind its competitors. It may go something like this: McDonalds puts solar canopies over its drive-through lanes. Wendy's responds by solarizing its red roofs. McDonalds then raises the ante by solarizing the golden arches themselves. Imagine the cumulative impact of pan-industry competition, not only on the collective carbon footprint of the corporate world, but on all the employees and customers they touch every day.

Of course, there will be laggards. There always are — companies, or even whole industries, that just don't seem to care or can't be bothered. Management with other priorities, or boards of directors that just don't get it. This is where climate change advocates need to focus their energy.

These companies will need to be "encouraged." Environmental groups need to shine a light on those companies that drag their feet. "Name and shame" environmental activism against the laggards may need to become more muscular — civil protests or even corporate proxy contests aimed at unseating the particularly egregious.

And if not the activists, hopefully it will be consumers themselves, Millennials in particular, who simply refuse to do business with companies that fail to reflect their core value systems. Either way, the laggards won't be able to lag for long.

Not in a post-Paris world.