Microsoft’s chief environmental officer says without urgent action, the global economy faces “catastrophe.” PricewaterhouseCooper’s global innovation and sustainability leader calls it “the challenge of our generation (over) the next 10 years.” Business schools agree: Climate change is an urgent crisis with major implications for business and investment, requiring immediate and comprehensive action. But what form will that action take?
This month MBA students, business leaders, and experts from around the world will gather on the campus of the University of Virginia’s Darden School of Business to assess the economic and financial implications of climate change. The ClimateCAP summit February 21-22 is about understanding “the 21st century’s biggest business issue” whose impacts by 2030 are forecast to reach $700 billion annually, with trillions in coastal, urban, and agricultural assets at risk.
But while climate change is a huge threat, it also represents a multi-trillion-dollar opportunity for forward-thinking business leaders, says Lucas Joppa of Microsoft, speaking recently on PwC’s’ “Davos Talks” podcast. Massive new markets for technology and infrastructure solutions are expanding throughout the world, Joppa says, and “what businesses need to understand is that a failure to act on climate is going to be catastrophic for the economy — and proactive action on climate is going to be positive for the economy and it’s going to be positive for individual businesses.” PwC’s Celine Herweijer agrees, calling climate change “the challenge of our generation (over) the next ten years” — one that “we have to tackle to be here in the future; to be fit for the future; to have a future.”
‘THE NEXT GENERATION THINKS ABOUT THIS DIFFERENTLY’
More than 40% of Fortune 500 companies have set goals for carbon reduction. One of them is Microsoft, which has pledged to be carbon negative by 2030. Another is United Parcel Service, the package delivery and supply chain management company which last May announced a plan to reduce greenhouse gas emissions by 12% across global ground operations by 2025, with a particular focus on renewable energy. Scott Price, chief strategy and transformation officer, says within five years UPS wants to get 25% of its electricity from renewables and 40% of ground fuel from low-carbon or alt-fuels. By the end of this year, he says, the multinational juggernaut wants 25% of its annual vehicle purchases to be alt-fuel and advanced-tech.
“This is becoming an imperative, and it’s no longer just large-scale organizations that are being requested to take accountability,” says Price, a Class of 1990 Darden MBA who will deliver a “Fireside Chat” at his alma mater on the first day of the ClimateCAP conference. “I think that the next generation thinks about this differently. You see more and more the ranking of companies in terms of their sustainability-mindedness. So for an MBA today, the idea that there’s a function or a department in the company that will take care of this is wrong. I think companies need to actively lobby the appropriate government agencies to create the tax or the credit environment that helps stakeholders rationalize. Because everyone wants the outcome. No one wants to pay for it.
“This has been a traditional issue. To me, the question is, where in a public-private partnership governments motivate the right behavior. In the U.S., they have for many years, in terms of some aspects of it, but I think we need to double down.”
Price is part of an impressive lineup of corporate speakers at ClimateCAP, including Mark Kaye, Moody’s chief financial officer; Matt Arnold, head of ESG and corporate responsibility engagement for JPMorgan Chase; Ed Freeman, Darden professor of business administration and co-academic director of the Institute for Business in Society; and Virginia Covo, global director of supply chain sustainability for AB InBev.
‘THERE IS MONEY TO BE MADE & LOST’
“For way too long,” climate activist Greta Thunberg says, “the politicians and people in power have got away with not doing anything at all to fight the climate crisis.” But inertia is giving way to frank discussion and action, and business schools are in the thick of it.
ClimateCAP was founded in 2018 by Daniel Vermeer, associate professor of the practice at Duke University’s Fuqua School of Business and executive director of the school’s Center for Energy, Development, and the Global Environment (EDGE), and Katie Kross, managing director of EDGE. The summit was created to give MBA students an opportunity to get up to speed on the business risks of climate change, Kross tells Poets&Quants, as well as the opportunities to innovate and gain competitive business advantage by responding to climate change. The fact is, even amid the threat of climate change, consumers still love to shop and businesses still need to make money. “It’s not a summit about politics or about policy solutions,” Kross says. “Simply put, there is money to be made and lost. Today’s business school students need to understand the impacts of climate change — for supply chains, for operations, for corporate reputations, for investment valuations — if they are going to be prepared to lead in almost any industry in the coming decades of their business careers.”
Climate change, Vermeer says, is already having massive consequences for the global economy. He points to the recent Australian bush fires, the California drought and fires of 2019, a heat wave in Japan that killed 160 people last summer, as well as flooding from Hurricane Harvey that shut down the city of Houston, Texas in 2017. “The costs of these disasters are mounting,” says Vermeer, who teaches about the business implications of climate change in his MBA class Business Strategies for Sustainability. “The World Economic Forum’s 2019 Global Risks Report puts ‘failure of climate change mitigation and adaptation’ and ‘extreme weather events’ among the top three risks for the global economy right now.
“Business leaders are beginning to understand and manage for these risks, but business schools are behind the curve in teaching climate change as a business issue. I think that any MBA graduating into this world is going to need to be savvy about the business implications of climate change.”
Four companies — Carrier, Dominion Energy, Corning, and Apex Clean Energy — and 18 B-schools are sponsors of ClimateCAP, including Harvard, Stanford, MIT, Wharton, London Business School, and Northwestern Kellogg. That’s up from 16 schools at the first summit at Duke’s Fuqua School in 2018. That conference drew 150 MBA students; this year the organizers are expecting closer to 300. About two dozen MBA students from participating schools have helped with the programming and are planning social gatherings for students during the conference.
More schools, meanwhile, are incorporating climate change into their MBA classes and holding conferences of their own. Change is happening.
“Since the first ClimateCAP summit, we’ve been really pleased to see increased interest by business school students and faculty on the topic of business and climate change,” says Kross, the lead author of EDGE’s briefing paper, Climate Change & Business: What Every MBA Needs to Know. “Last year, Stanford Graduate School of Business hosted its own Climate, Business & Innovation Summit. Harvard Business School also showcased an exhibit on business and climate change in 2019. We’re beginning to see more classes related to climate change added to business school curricula. I think the time is right for business schools to focus on the role business and investors can play in responding to climate change.”
PASSION FOR ACTION ON CLIMATE CHANGE
The itinerary for the 2020 ClimateCAP summit includes talks and panels with experts and academics on such topics as “Pivoting in a Disruptive Business Environment,” “Innovation’s Role in Sustainable Growth,” and “Navigating Public Policy and Corporate Influence.” On the second day, there will be problem-solving industry breakout sessions on transportation, energy, agriculture, and more. Among many other highlights, Bill Weihl, former director of sustainability at Facebook, will do a brief talk on why students might be interested in taking a “Climate Positive Career Pledge” and how to use the leverage of their careers — both in terms of employer selection and internal advocacy/projects — to achieve progress on climate change mitigation.
Scott Price, whose fireside chat is scheduled for early on the first day, says he has been aware of the impacts of climate change since well before joining UPS in late 2017, and even before his previous job with Walmart, where he was responsible for global sourcing, international technology, and international logistics programs. Having lived in six countries and worked and been responsible for 77, he has seen the impacts of changing climate on developing countries and global leaders alike, as well as widely disparate approaches for contending with the issue. And, regrettably, he has also noticed a flagging commitment in some of the more developed economies.
“An interesting spectacle is that the lowest common activity in many, many developing markets is recycling out of economic need, where you see communities ensuring that nothing gets wasted,” Price tells P&Q. “You then get to wealthy countries, which in many cases talk a great story about recycling and sustainability, but where the actual behavior of residents doesn’t match the rhetoric: they’re finding out that because there’s no economic value to recycling for the trash collector, they’re just mixing it and it goes to the same place.
“And so I just find a lack of commitment in many of the developed economies. And I don’t call just out the U.S. I saw it in other markets as well. Look, with this rush to the middle class by a couple of billion humans who have not achieved that same economic comfort, we will consume the resources of this planet at a pace never seen before. And we better wake up to the fact that that is not a good thing.”
Price was in Davos, Switzerland for the World Economic Forum in January at the same time as teen activist Greta Thunberg, and though he didn’t see her speak, he has been impressed by her passion. That passion is contagious, he says — and crucial.
“The reaction she has gotten is amazing,” Price says. “I was in Davos when she was there. My wife went saw her speak. She said it was like the girl was a rock star. I just think that passion will continue to build, and I think that to get consumers to do the right thing means that companies have to step up, no matter what they do, and take a higher-level position.”
The ClimateCAP registration deadline is Friday, February 15. Cost is $125. Late registration is $150. Darden students may register for $45. Visit here for more information.
See the next page for commentary on the upcoming summit by MBA student fellows who plan to attend.
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