The 100th Crowd Forum was a moment to thank the 300 speakers and 17,000 attendees who have contributed to a rolling conversation spanning nine years, and we were extremely privileged to mark this important milestone with Christiana Figueres.
Christiana has had an extraordinary impact on the global climate agenda. Inheriting the leadership role for the UN climate agreement process in 2010, her infectious optimism was instrumental in 194 heads of state signing and ratifying the Paris Agreement. It was the first time climate talks had ended in agreement.
Christiana is now engaged in a series of high-level roles, including as a Climate Leader with the World Bank and Vice Chair of the Global Covenant of Mayors, and focusing all her efforts on accelerating action on climate change in order to bend the curve of emissions by 2020. Christiana provided an insight into her work, talked about why 2020 is so important, and challenged the audience to come together in radical collaboration to ensure the temperature limits outlined in the Paris Agreement are not breached. Christiana was interviewed by Axel Threlfall, where they explored the role business can play, how the climate agenda can prevail in a world of shifting priorities and where the breakthrough solutions are emerging.
From a consumer perspective what does net zero by 2050 actually look like; what will their role be, will they notice a difference, is it evolution of revolution? Can we actually visualise this to help take consumers on that journey? What is your vision of the zero carbon 2050 home? What steps should business be taking today to enable this journey?
There is the question about meat and the role of protein. What is our diet going to look like? What will be the role of agriculture? There are shifts that will need to happen in dietary habits to make mission 2020 work. It is very tough from a behavioural point of view because dietary habits are very local and people don’t like to shift. Example of China where people want more and more meat.
We can ambition a future with protein-based food that is not producing too many emissions. In particular, insects can play an important role as they contain a very high intensity of proteins. On a blind test people don’t realise they are eating insects.
There is a huge potential around technology. It will be important to help us go towards synthetized food and proteins, plant-based products and less meat. Meat is a big contributor of climate issues.
Obsolescence and renting model
Convenience is the key for consumers to adopt better habits. Consumers will need to recycle their products or get them repaired for them to work longer. This will call for disruptive business models. For example, people will want to learn how to fix their microwave or toaster.
Example: There is a shopping centre in Sweden run by a recycling company, consumers can drive in and take all the things they no longer need, there is a repair section and if cannot be fixed the shop will take care of the items. You have to make it easy and desirable for consumers to change their habits, have to make them care.
Should there be pressure on manufacturers to make it easier for consumers to repair some parts of the products they buy? There is this idea of leasing products, then send them back to the manufacturer, and then lease something else. The leasing company maintains and services the product and then after a few years it goes back to the manufacturer. There are financial implications to that for manufacturers and individuals that need to be dealt with. There is uncertainty for consumers around that model.
Housing and water consumption
We are becoming more mobile, people move around a lot and that has implications. Will the housing market become a purely rental market? When people move around a lot, they buy new appliances more often as well. People who rent move every two years on average.
There is a question around water consumption in people’s homes. There are rules in Australia limiting water use but would this be applicable in countries like the UK? Could the government impose regulation on water use for households? It is a difficult conversation to have with consumers. It has to become socially normal and acceptable among citizens to let the government impose such regulation. And usually governments will take measures after a crisis, not proactively.
Overall, it’s difficult to imagine how 2050 will be because it changes very quickly. Future trends from over a year ago are happening now. You can’t ask consumers to make the right choice when they have already too many choices.
Carbon pricing seems to making a return, both at the country and company level. What are the merits of using carbon pricing to remove carbon from a business, and its supply chain, versus absolute reduction targets and other methods? And with a range of prices being used by companies, how does one arrive at a price that is both scientifically robust and acceptable internally?
Introduction to setting an internal carbon price: Craig Simmons
Organisational carbon pricing schemes vary across businesses (no one size fits all), but in essence successful schemes have at their heart a virtuous cycle of carbon emission measurement, pricing and reductions.
Typically, the process starts with a corporate GHG inventory (typically just scope 1 and 2, scope 3 is much harder to do), which can be split by business unit. A levy is then put on the measured carbon (this can be levied at a BU level), with the money being put into a central fund. This can be bid against for money to invest in carbon saving projects, leading to a reduced footprint and therefore reduction in levy. This is led by a corporate carbon target and driven by a rolling social carbon price and annual discount rate.
One guest had set a carbon price within their business, instead of a central fund, this price was used to drive top level investment in energy reduction activities supporting business case development. The first step was to have good quality carbon and cost data, followed by a clear group wide energy reduction target (in this case, 27% reduction by 2020).
Detailed energy audits were undertaken to give the team a list of investment opportunities across the business. Following some research from the market, the figure of €40 was identified as the level to drive action. This additional lever tipped investment projects from being 4-5 year payback to 2-3 year payback, which drove investment.
One key barrier was getting buy in from the executive team but once enough people were on board, a change of mindset occurred within the board and finance departments. Previously they had challenged investment in energy efficiency; now they challenge lack of investment. This is central to the culture with incentives given to drive down Opex and meeting CO2 targets. MD’s get ranked on their carbon reduction, which is crucial to the success of a programme like this.
What are the barriers to setting a carbon price?
• Getting management buy in. There is often a lack of understanding at this level, they need proven examples of success to convince them.
• No divisional targets for carbon reduction, only set at high level.
• Added cost may remove short term competitive advantage
• Where the commodity price is low but carbon emissions high (e.g. SF6) there are very low cost savings so reduction is hard to justify (though pricing carbon can help it appears in such cases to be disproportionate)
Challenges that organisations are facing
• Science Based Targets or carbon price – which comes first.
• International organisations-prices need to vary across different regions- how to reconcile?
• Supply chain. These impacts are difficult to quantify and control. Who gets the benefit of any cost savings?
Advantages of a carbon price
• In developing countries the carbon intensity of the grid is higher, therefore more carbon can be saved, for less/same investment as in developed countries.
• Can give medium term competitive advantage if a company is a first mover. There is more than finance on board; if competitor does this first, how will this affect reputation/market share? Consider marketing/operations/HR.
Questions still to ask….
• How to select the right price? The UK Government publishes the Green book ,which advises on this. Many prices for carbon – for £10 to £150/tonnes - which is correct (e.g. social cost of carbon).
• Can/should other sustainability metrics be included? Carbon only can distort decisions.
• Internal competition for funding, how do you deal with varying payback periods?
• Integrating scope 3. How can this be done?
How should companies communicate climate in 2017? Given the urgency of Christiana’s 2020 objectives and the crisis of liberalism, is it time to increase communications? Or does the public mood suggest it is time to make quiet progress, and focus stakeholder messaging on more topical social issues? This table is primarily for those involved in communications and marketing.
Level of communications
Some felt we should communicate less to simplify and enhance the clarity of key messages. However, the majority agreed an increase in communications is necessary:
- Society is up to the challenge
- Need to overcome potential fear by some companies to communicate on climate
- Belief in communications – more can be done and it can be strengthened particularly within supply chains and to corporate clients
- Need to report position on climate because all business depends upon environment in some form and will have impacts
- Sectors should not be silent on challenges they face – climate change is an important part of communications strategy and for project success achieved via stakeholder engagement
Communication strengthened by:
- Sincerity: should be meaningful and there needs to be action behind communication
- Relevance: should be relevant to target audiences
- Immediacy: should be fresh e.g. ocean plastic success in harnessing immediate action through beach cleans
- Credibility and authenticity: should be transparent - ensure the true story is reported and in turn authenticity will protect the brand
- Collaboration: shared messages B2B – business being part of something bigger heightens momentum in uptake of climate communication and B2C – get business setting parameters for ad agencies so marketing is aligned in its communications
- Emphasis on big brands and companies with large budgets - attention should also be on small company successes with smaller budgets
- Consumers not interested in green products but wanting an ethical and responsible firm
- Consumer abdication of responsibility by placing emphasis on company to do more - surveys have shown UK has highest expectation of brands but yet is the least likely to change
- Business needs to have strategy and diversity right internally so it can be confident coming into the marketplace (any business should be frightened if trying to green wash!)
- Credibility - big challenge translating business into consumer facing brands
- Consumers who do not want to be educated or informed by business
- Challenges in advertising sector and threats of fake news
Opportunities for reframing messages
- Innovation: communicate in new ways to demonstrate benefits to target audience and gain competitive edge e.g. success in energy sector for communicating renewable benefits
- Objectives: communicating objectives gets people to do something and through action you can achieve progress
- Achieve balance: can tackle reducing environmental impact without talking about it directly e.g. success with food waste – consumer message was centered on money saving but business was aware of social and environmental impacts
- Creative and relevant hook: research for large and small businesses shows consumers are interested in themselves – seeking things which are cheaper and easier to use but would also accept emotional and social benefits
- Launch targets: A. Internally important communication to motivate employees and get suppliers working towards same goals B. Can report and measure against targets
- Remove choice: solve problems on behalf of the customer - fix ethical solution for consumers and take the ethical dilemma away from them e.g. success in supermarkets with bananas that are only fair trade
Discussion followed an arc that can be summarized in three main segments:
1. Current context for climate communications
• Over several decades, climate communications have evolved from:
o the margins (discussion in scientific, environmentalist, activist communities)
o to mainstream (themes in political, media, social/cultural ideologies - Al Gore and Bono)
o to capital markets (businesses striving to convince lenders and investors that they are capable of addressing climate risks and exploiting opportunities)
• Anti-climate, Trump-type political agendas leading some corporates and government agencies to cautiously adapt/quiet their communications – these adaptations do not necessarily reflect changes in actions.
o Observe some celebration of “dated” technologies and energy sources (e.g., coal) in communications. This contrasts with the more progressive approaches seen in other parts of the world like China.
• Risk of climate communications fatigue amongst consumers and voters.
• In response to anti-climate political agendas and climate communications fatigue, is the next evolution of climate communications a regression to specialists? (scientists, investors, corporate strategists, physical infrastructure planners/developers, etc.)
2. Drivers/levers of climate communications
• Drivers/levers seem to fall into two categories: carrots or sticks
• Guilt and fear
o Appeal to system 1 thinking using vivid depictions of consequences
o Appeal to system 2 thinking using logical arguments related to financial and reputational risk
o Communicate the business case for action and contrast to the costs of inaction in financial terms
• Hope, optimism, achievability
o Communicate scientific and social consensus/cohesion, progress to-date, success stories, clear and measurable goals
3. Knowing the audience
• Careful attention needs to be paid to segmenting the audience, targeting specific segments, and positioning communications accordingly.
• Segment audience by type two key dimensions:
o Relationship (customer, business, voter, investor, public)
o Position on acceptance spectrum (from denier to activist)
• Use drivers/levers best suited for targeted segment.
• Focus on who is listening and acting (cities, businesses, investors)
Do you agree that companies with progressive climate positions tend to be better at engaging their employees on climate issues? Recognising that climate fatigue exists, should sustainability experts seek to corral employees into climate action through volunteering and other means, or should they allow employees to choose the social and environmental issues that are most important to them?
How can we engage internal colleagues and external customers in climate change initiatives?
• Reward colleagues based on environmental initiatives.
• Link rewards to savings made on home energy bills.
• Give out how-to guides for energy saving at home and ask colleagues to feedback on what things are successful.
• Offer employees money to buy energy efficient products to use at home.
• Organise carbon challenges and competitions within the company.
• Make things relevant to employees and their personal finances.
• Use the power of celebration. Create heroes out of staff and reward them in non-financial ways for environmental ideas and innovation.
How should we communicate with colleagues?
• Talk the language of the people you want to address. Don’t use vocabulary that is too technical and don’t forget who the audience is that you are trying to speak to.
• Recognise that one message doesn’t necessarily suit all. Sustainability is something that you need to encourage people to feel. Find the hook that makes it relevant to them.
--> However, diversifying the message could bring the risk that the message is too broad and has no depth.
• Think about the differences required when engaging with colleagues in regional offices overseas.
Does anyone find challenges with having to go to the board with numbers and back up evidence?
• It is a challenge to create an infrastructure of measurement.
• When the data is finally available the board can react in different ways as data removes the opportunity for excuses.
• In some countries like the Middle East there is no mandatory reporting which makes it much more challenging.
• When reporting on achievements it is important to also analyse the patterns to look for why you have achieved them.
Who should climate change engagement target within the business?
• Top level, board level commitment is essential. Boards need to be more holistic in messaging and thinking. Sometimes they focus too much on money and cash flow.
• Engaging with the middle management level is difficult.
• Engaging with millennials and ‘aspirationals’ can be very successful. Involve them in decision making. Give them access to sustainability leadership fast track schemes.
• Senior managers should engage directly with front line staff so that they can listen to their concerns unfiltered. Use open communication channels and promote the non-hierarchical nature of sustainability work.
• Managers should encourage non-competing collaboration between all staff i.e. people learning from each other but not competing.
How can large energy users buy new renewable energy in the post subsidy era? It is now 10 years since the first grid connected PPA’s, and many companies have invested in onsite generation. In the context of falling subsidies and urgent climate science, how can companies make significant progress in their use of renewable energy in 2017?
The group opened the discussion with a question of energy in a post subsidy era. The corporates in attendance were all looking at ways to procure renewable energy. The reliability and resilience of any potential energy source were flagged as important to consider in any renewable energy opportunity where there is intermittent generation. Energy buyers may be deterred from making long term commitments to renewables due to current low pricing and as there is a view that prices may fall. Perhaps the framework needs to be recalibrated to reflect the market and offer fair value to both sellers and buyers . The group moved on to clarify the difference between energy efficiency and productivity, which was deemed more important.
The discussion moved towards laying out a path that companies might follow to embed renewables in their operations. Additionality of renewables was discussed and is preferred by most however where this is not possible certified renewables from existing assets is accepted. Prior to committing to renewables the first step might be making sure that operations are energy efficient, in doing so there must be a value placed on the “negawatt”. Later, old technology would be replaced with new, more energy efficient, technology.. This path requires a business to have a 20 year horizon. For companies that have shorter views or who rent their property, plant, and equipment, this is a challenge. The companies would not want to make commitments beyond a five year time frame and therefore look for energy efficiency and renewables opportunities with a shorter commitment period.
The group discussed what new technologies for renewables they had seen. An important example was battery storage, which will allow companies to deal with the disconnect between the time when energy is produced and when it is needed. Businesses also need to generally address the feasibility of renewables in their business and the challenges that are associated with certain kinds of renewables. The topic turned to financing technological advances such as batteries. Energy storage is a young field and we need to understand where the economic benefit of storage is to access financing.. Asset managers might be interested in investing in this type of technology through engagement with companies, thought leadership, and active ownership.
The next topic revolved around using Electric Vehicles as storage. For this to be effective, cars need to be charged quickly and a lot of work needs to be done to improve user experience of EVs. Further, there is a large variety of standards that are likely to change and become more complicated in the future.
Finally, the group discussed other innovations in the way people are buying and using energy including demand side response. They discussed the problems associated with blackbox technologies and that quality data and measurement and verification is necessary to ensure success.
GHG emissions must reach a turning point in 2020 and begin their steady decline if we are to ensure the SDGs are met in 2030 and net zero emissions achieved by 2050. How can Christiana’s various efforts to raise the ambition on climate help business accelerate their decarbonisation programmes? How can you anchor 2020 into your business's planning efforts?
How should companies prepare for greater investor engagement and tougher climate risk reporting standards? We’ll discuss the risks covered by the new FSB and TCFD guidelines, from energy prices to storm damage, and how to identify, assess and communicate the financial impacts. Should sustainability teams welcome these guidelines, how will they engage with finance functions?
• FSB guidelines will increasingly move from voluntary to mandatory.
• If disclosure is material then it’s often already mandatory in certain jurisdictions.
• But will take some time to become mandatory for all sectors globally.
• Disclosures will require learning as scenario and stress testing background is not well understood.
Linking to Mission 2020
• There’s a real urgency of 2020. But will organisations be prepared to meet the timescales needed? Will they have time to take action to implement change?
• 2020 is only 3 reporting cycles away!
Relationship between risk and reporting
• Moving to greater transparency for investors, so they have better understanding of risks.
• But often there’s a mismatch between ratings and risk as ratings agencies currently have a narrow time frame and mandate. Investors need more than just credit rating, what about wider data by supplementing ratings to address other factors. For example, a business continuity number might help.
• Most reporting data is backward looking. But can be just as important to look where companies are going, and what steps they’re taking.
Voluntary vs Mandatory reporting
• Voluntary won’t drive change quick enough. Regulations drive behaviour.
• Default option is always based on base regulation so a lot of companies do nothing unless a specific driver.
• When reporting matures, some companies aspire to be in a leader position and step-up from simply following regulation, to going beyond.
• Downsides that regulation tends to be one-size-fits-all and so not focused on materiality.
• Challenge is to create regulation that is fit for purpose, as lots of regulation is flawed.
• Seeing institutional collaboration around remuneration and share action groups to give a common voice.
• Regulation when designed to have increasingly higher standards kick-in over a set period, drives a better standard and system over time (e.g. decreasing vehicle
• Regulation is often playing catch-up and seldom drives innovation; rather it drives laggards and mass-middle to change.
How easily for companies to respond to climate risk disclosures?
• It takes time to develop reporting processes.
• The focus on data points is important for benchmarking etc., but investors also understand companies through the “how and why”. Not just data alone.
• If focus too much on accuracy of data, will lose focus on innovation.
• Could lead to a disincentive: companies shouldn’t get penalised for recognising the risk and reporting against it.
With many companies are turning to NGOs and charities as partners to achieve their social and environment objectives, we ask if this adds up to a sea change? Which examples do you admire and why? Does it matter if they become quasi consultancy arrangements? Is the third sector taking a significant risk in becoming too close to corporates, and how can they protect against this?
Benefits of partnerships
• NGOs and companies hold different information, views and approaches in relation to an issue; partnerships allow skill sharing and are vital to problem solving
• Shared value
• Increases credibility
• Creating new ways of doing business: allows the creation of something new that is often aspirational and typically outside core business
• Companies are able to be more open in sharing information gained through partnerships
• The outcome of partnerships usually has a wider positive impact than on just the company
• Relationship building between sectors
• Commercial tension between the parties
• Can an NGO remain impartial?
• Listening to the other party is essential
• There must be a shared vision and values, but also shared incentives
• Success depends on the culture of the parties – needs to be a genuine dialogue
• Collaboration is important for continuity
• There is a move away from transactional relationships or combative relationships to collaboration
• NGOs are becoming more commercial and sophisticated: accessing funding and social impact through other avenues
• NGOs acting as monitors and solution providers, eg. by highlighting an issue within a company and then working with the company to solve it
• NGOs acting as mediators, facilitators and convenors of sectors that are causing damage / creating problems, and assisting in providing solutions
• NGO representatives being invited in to company meetings / consulting
- Note there is a limit to this relationship, compared to traditional partnerships
• Increasing awareness of sustainability: appointment of sustainability experts and advisory boards to companies, often drawing from NGO expertise
As many companies start to plan for a zero carbon world, we consider the major interventions for achieving scale. From setting science based targets to solutions such as onsite generation, PPAs, 3rd party financing, EV’s, Artificial Intelligence and storage. Where will the major obstacles and breakthroughs lie, and how should companies set a realistic timescale for achieving zero carbon?
Decisions on zero carbon emissions are up against the short-term thinking that guides most investment decisions. Getting c-level decision makers to contemplate a 30 years horizon sparks resistance in terms of risk, such as being stuck with a legacy technology, the diminishing cost/value ratio as technology improves and PPAs.
A successful approach to counter this resistance is to propose a portfolio of approaches that mixed lease agreements, direct purchasing, adoption of tariff and PPA.
At Lego, a family owned company, commitment at board level paves the way for long-term plans to be drawn up and implemented regardless of the cost and time implications. This is an effective way forward which tends to be more commonly followed by family businesses as their priority is to ensure the longevity of the business to succeeding generations. Majority of resistance due to short-term thinking comes from companies and corporations that are financed through capital markets.
The competitive landscape and business practices specific to an industry can also be a barrier. The hospitality sector struggles to influence and advocate low carbon practices in new building as properties are flipped around fast. With a large number of brands there’s many options to choose from at lower cost against good quality sustainable buildings.
Amongst the petrol companies, Shell stands out for its bold choice to diversify from petrol and its commitment to helping consumers to be less addicted to petrol.
The electrification of transport is another one of those topics that sparks adverse arguments about power cuts, stress to the grid, storage concerns, etc. The answers can be found in creating joined-up business models that form new approaches to inspire others. Public opinion is not the problem, execution is more critical to addressing the case of cost/value ratio. Internal way of a company to look at it and its ability to articulate the benefits and value depends on how decarbonised the electricity supply is.
At Covestro the inability to forgo a dirty electricity supply has led to plans that aim to reduce energy consumption by 50% and to the adoption of EP100.
For the majority of business represented at the table, the biggest burden is inherited CO2 from all tiers of their supply chain. Decarbonising the supply chain is a tough call, it requires to influence suppliers to switch their procurement behaviour and choices. One strategy is to cut your own consumption in the first instance and then convince your suppliers that it is their responsibility too. It is easier to influence Tier 1 as visibility of scope can be more clearly expose. With Tier 2 and 3 is much harder to have a transparent picture of what happens. Gathering data from Tier 1 supplies raises questions and complaints and there’s no legal obligation to adhere to such requests. Partnering for influencing and advocacy both upstream and downstream gives rise to combined solutions that are a win/win on both sides. Different technologies and approaches highlight where waste occurs along the supply chain and once this data surfaces and in known, one can engage in compelling conversations for such partnerships to achieve concrete results.