A group of CEOs in emissions-intensive industries says they want to make sure that climate change doesn’t get pushed further down the list of priorities among U.S. lawmakers during the COVID-19 pandemic. Members of the CEO Climate Dialogue (CCD) struck a positive, if sometimes antsy, note about the reception they received after their second day of virtual meetings with a bipartisan collection of more than a dozen senators and House members last week.
The CCD represents $1.4 trillion in combined annual revenues and formed in 2019 to advocate for a price on carbon and other policies toward slashing CO2 emissions 80 percent by 2050. It represents 21 corporate titans in chemicals, oil and gas, energy, construction materials and consumer products, from BASF to Unilever. They’re joined by the nonprofits Environmental Defense Fund (EDF), The Nature Conservancy, World Resources Institute (WRI) and the Center for Climate and Energy Solutions.
Leading the world's largest cement producer in "an energy-intensive, trade-exposed industry," Jamie Gentoso, CEO of LaFargeHolcim's U.S. Cement division, is among those calling for aggressive climate policy. "But at the same time, we need it to be durable, we need to be effective, we need it to be market-based," she said during a press briefing Wednesday via Zoom.
To be clear, at this point the CEO Climate Dialogue is not talking about specific legislation. Rather, this second round of lobbying since the group emerged is noteworthy because its high-profile, high-emitting businesses, including BP, Shell and Total, say they only intend to amplify their voices. Dow, Dupont, Citi, Ford, Carrier and Syngenta are also on board.
The choice is very real now, that we could build back the same or we could build back much, much better, towards tomorrow's economy. And that's what all of us are working on.
The CCD is one of many sustainability collaborations attracting corporate friends and foes from industries that until recently were reluctant to fess up to their heavy-emitting ways, even if many others have yet to follow. LaFargeHolcim, for one, is pushing technologies and partnerships to change the fact that cement accounts for up to 8 percent of global CO2 emissions. Yet with little demand for low-carbon products and carbon capture technology only nascent, there needs to be a transition period, Gentoso said.
A great reset?
So why did this group of CEOs pick now to pressure Washington on a carbon price? "Things move slowly in Congress," she said. "We've got to get this conversation going and we've got to, as business leaders, really get vocal about making it happen quicker and faster."
The corporate chiefs with Gentoso expressed a blend of hope and impatience for their agenda — hope that action on their goals can accelerate, after seeing the record spending by government and rapid responses to COVID-19 by the private sector. Impatience comes from seeing U.S. investment being directed at yesterday's economy, not to mention the need for remedial sustainability education among lawmakers.
"The history of progress in the world is quite often that when there is a crisis, you have a choice," said Andrew Steer, CEO of WRI. "And the choice is very real now, that we could build back the same or we could build back much, much better, towards tomorrow's economy. And that's what all of us are working on."
COVID-19 as an accelerant
Although the pandemic has been 2020's predominant world-changing event, it has not dampened enthusiasm for sustainability among certain business leaders. Instead, the crisis is laying bare its contrasts to and connections with the climate crisis, which promises to be far more complex and wide-reaching.
For instance, the lack of international cooperation on the coronavirus has propelled people to realize they need to get their act together on climate change, said Ralph Izzo, president and CEO of utility PSEG. He also noted increased pressure on energy producers to tackle their environmental effects, with poor air quality tied to bad outcomes for COVID-19 patients. At the same time, Izzo said the recession lessens the chances of investment in climate-friendly technologies.
Industries made many rapid adaptations in the face of COVID, leaving some business leaders to wonder if climate goals can't move further, faster than anticipated. LaFargeHolcim is one of many "essential" businesses that scrambled to ensure new health and safety measures for its workers during shelter-in-place orders. Internet providers stretched to provide newly critical information infrastructure. Telemedicine made unforeseen advances in a matter of weeks. DSM found itself reevaluating the for employees to commute to an office in the future, once nearly all of them began working from home and the company's Scope 3 emissions dropped.
"The one thing that we've learned from the COVID pandemic is what we can do if we work together, and what the consequences are if we don't," said Hugh Welsh, general counsel, secretary and president of DSM North America. "We're going to see an acceleration of the conversations we have, again, not just with shareholders, not just with legislators, but with our customers, and how we can work together to find solutions."
"This momentum is starting, but now we need our government leaders to come on board," said Jennifer Morris, CEO of The Nature Conservancy.
Picture the Tour de France, with several elite riders initially commanding the lead. They're like the climate-action frontrunners such as DSM, Unilever and PSEG, noted Steer. But watch the peloton, the main group of cyclists behind them.
"What's been happening literally in the last three or four years is that the peloton [has] been saying, 'I'd like a piece of that too, actually. This seems to be working for them,'" as evidence from analytical work, the financial markets, company staff and even the customers proves. "So you're starting to get that peloton splitting off, and a whole group more is catching up to those front runners. And once you get that it's a little bit like ... the tipping point, it's almost like a virus takes over. And then you move from something marginal to something that’s actually quite exciting."
For example, the Science-Based Targets Initiative has attracted 978 companies to take "science-based climate action," including Volvo Car Group this month. The SBT-committed companies are responsible for 6 gigatons of carbon, more than 10 percent of the world's emissions, Steer said. Just since August, Siemens, Steelcase, Moody's, Bayer, Colgate Palmolive and others have brought the total of companies setting science-based targets to 460.
Welsh, of DSM North America, said he had been frustrated for years by the lack of analyst interest in climate-related efforts, but that has changed just in the past year. "Now when we have our analyst calls ... we get a lot of questions about the efforts we're taking to mitigate climate impact in our own operations, and what are we working on to enable our customers to help with their own efforts to mitigate climate impact."
Now, 43 percent of DSM's shareholders identify as being driven by ESG issues, a 40 percent increase from a year earlier. A once-difficult conversation with stakeholders is quickly becoming easier, and DSM is embracing climate change as a driver of innovation, Welsh said.
You need to either have a change in the point of view of the administration or a change in the administration.
Environmental advocacy groups also expressed feeling more wind in their sails lately.
"We now have momentum that we never had before, especially within companies," said Morris, who described the need for radical collaboration between NGOs and corporations. "I'm hearing from CEOs that it's actually not the shareholders, it's the employees ... and for companies to get the best and the brightest, you have to be on the right side of history."
Steer of WRI found room for hope among the rising youth climate movement. "Who knows? There could well be something quite remarkable happening in the next couple of years," he said.
What will it take in Washington?
Welsh noted the need for compromise in politics, not just between Republicans and Democrats but within each party. Ultra-conservatives and ultra-progressives might not immediately like a price on carbon, and the perfect is too often the enemy of the good, he said.
Izzo of PSEG described three things that would pave the way toward federal U.S. carbon-pricing: "You need to either have a change in the point of view of the administration or a change in the administration, and you need to have a change in the rules of the Senate [so that] it takes 51 votes to get something done as opposed to 60. And then you probably need the Senate to change parties."
He made it clear that he was championing the issue, not any of those specific political scenarios. "One would hope that we can get the issue resolved with whoever is in power, just on the strength of the arguments," Izzo said.