How companies can use tech to turn climate commitments into action and profits
Fueled by a surge in employee, customer and investor pressure to act on climate, and the near universal recognition of how a warming planet threatens the global economy, businesses are stepping up their climate commitments in a big way. This was especially true in September, when hundreds of companies announced their intentions at Climate Week, and in August when the Business Roundtable unveiled its new take on the purpose of a corporation: to "serve all its stakeholders" and "protect the environment by embracing sustainable practices across our businesses."
These commitments — and the adoption of purpose in corporate America — are certainly reasons for encouragement. Unfortunately, the reality is that "when… aspirational rhetoric is paired with middling financial performance, there is rarely a happy ending," noted New York Times columnist David Gelles. In other words, purpose doesn’t work without profit.
When it comes to climate change, how can companies deliver on their promises to reduce emissions in line with what the science says is necessary, and deliver value to shareholders?
An October report, "Business and the Fourth Wave of Environmentalism," suggests one possible answer: CEOs can turn their technology investments into a one-two punch that delivers business results and protects the planet.
The findings of this second annual analysis make it clear that business leaders are increasingly familiar with emerging technologies, are weaving sustainability goals more deeply into business strategy, and yet aren’t fully connecting the dots between how the innovative technologies they use to run their companies also can be their best solutions for measuring environmental performance and accelerating results.
The report surveyed 600 business leaders (CEOs, VPs and directors) in major companies across retail, manufacturing, energy, technology and financial sectors with $500 million to $5 billion in revenue — and here is the primary takeaway: While 92 percent of executives agree that emerging technologies can help improve both their bottom line and sustainability, only 59 percent are investing for this purpose.
This 33-point opportunity gap shows that companies are leaving environmental and business opportunities on the table despite that 90 percent of those surveyed said consumers increasingly will hold them accountable for their environmental impact, and 94 percent believe investing in new technology is essential for staying competitive.
Closing the opportunity gap will require that businesses apply existing and emerging technology for sustainability purposes, and deploy it at scale.
Investment firms already are seeing and taking advantage of this golden opportunity. As TechCrunch’s Jonathan Shieber wrote in his analysis of the new report, "The $9.2 billion that investment firms committed to new technologies in 2018 was a 127 percent jump from 2017 and returns the category to highs it had not seen since the height of the cleantech bubble in 2010." Shieber added: "Sustainable technologies are indeed poised for a renaissance."
Entrepreneurs and innovators, backed by forward-looking venture capitalists, are bringing potential breakthrough technologies to the horizon on an almost daily basis. Climate risk analysis firm Jupiter Intelligence, for example, recently raised $23 million to expand its business into new areas such as wildfire risk assessment for companies and cities.
And research from PwC estimates that using AI for environmental applications in agriculture, water, energy and transportation could contribute up to $5.2 trillion to the global economy, 38.2 million net new jobs, and reduce greenhouse gas emissions by 4 percent in 2030.
Additionally, the global environmental sensors market is predicted to be worth more than $3 billion annually by 2027. These sensors are making it easier and more affordable for companies to detect, visualize and manage a wide array of environmental impacts.
The report findings also suggest that business leaders can close the opportunity gap by increasing their understanding of the emerging tech landscape and by increasing communications between C-suite executives, 81 percent of whom are confident about the potential for environmental innovation to improve the bottom line, as compared to just 51 percent of directors.
Looking forward, we need more companies to develop and deploy technologies that can help business leaders find faster and cheaper ways to reduce pollution. As they put artificial intelligence, data, robotics and other emerging innovations into practice to stay ahead of the competition, they also can put those technologies to work to accelerate the transition to a 100 percent clean economy.