David Bent, director of sustainable business at Forum for the Future, describes the new frontier for leading companies.
In my 10 years at Forum for the Future, I have seen a shift in mind-set among senior executives at leading companies.
In the early 2000s, their attitude was summed up by the word ‘responsibility’. Companies had a responsibility to minimise their bad impact on the world.
But it turns out that unsustainable development has a bad impact on business, with resource shortages affecting the long-term viability of supply chains. That’s why leading companies talk in terms of ‘sustainability’.
Doing nothing presents real risks. Acting now opens up opportunity. Executives in leading companies are realising that long-term value creation requires a dynamic, successful society. And creating this means the global economy must operate within environmental limits, as well as ensuring people have the capability to act through skills, institutions and other social foundations. But creating these conditions is too much for one company alone.
That’s why, when I look at leading companies, I see them exploring the next frontier. They are learning a new dance, which I call #theBIGshift two-step of ‘shape and innovate’. They are both shaping the context around them, and at the same time innovating their core business offer for commercial success.
Look at Nike. The Road to Zero coalition will shape the supply chain so there are no more hazardous chemicals in its products by 2020. This is a good thing for everyone. Internally, Nike is training designers and developers so it can produce the best apparel and shoes without hazardous chemicals. This is a good thing for Nike’s shareholders.
Change agents in companies tell me that learning this new dance is difficult. The ‘shape’ step often means collaborating with competitors, and finding leverage points in a complex, confusing world. Usually big companies are adept at incremental improvements on existing products or services. But this particular ‘innovate’ step is about long-term disruption; it means being prepared to cannibalise today’s sales for a more successful tomorrow. Developers of breakthrough innovations in big companies struggle to nurture them and protect them from the momentum of business-as-usual.
So, what do I expect from businesses as they try to learn this two-step? First, different companies are at different stages of awareness about the risks of unsustainable business, and will act accordingly. The unaware will remain laggards. The aware will watch the leaders for stories of success. Then they will join in.
The curious companies will start to experiment with different collaborations. The experimenters will get more systematic. Today’s leaders will see it in their own interest to help other companies to make a similar journey.
Second, there will be consolidation of best practice through collaboration. There’s a need: I know of at least three different attempts at ways to report on sustainability, although I hear of moves to negotiate a combined standard. I know of at least four different attempts to establish a widely accepted definition of ‘sustainable business’ which will set expectations of what is ‘good enough’. The same is true for labour standards, packaging, and more.
Any young field has a period of diversity followed by a shakedown, in which a dominant version comes out on top. Sometimes the winner simply beats the others; sometimes they all merge. The same will happen with today’s dizzying variety of collaborations within sectors.
Finally, there is the need to innovate to win. After all, companies need to create shareholder value. I expect leading businesses to gather many players around themselves who can help originate, develop and then scale innovations. You can refer to this as ‘stakeholder engagement’, but that seems too sterile to me.
They are orchestrating an ‘innovation ecosystem’ – this is what will emerge from their shape-and-innovate dance. And this will be how companies win in our connected, interactive, collaborative world. They will lead ‘the big shift’ towards building long-term value, together.
David Bent is director of sustainable business at Forum for the Future. This article originally appeared in Green Futures, the leading magazine on environmental solutions and sustainable futures published by Forum for the Future.
Will Self-Driving Cars Be Better for the Environment?
Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?
But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?
The Big Picture
The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.
That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.
One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.
There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.
As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.
Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.
Make and Model of Car
Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.
On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.
The Bottom Line
Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?
Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.
New Zealand to Switch to Fully Renewable Energy by 2035
New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.
New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.
Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.
Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”
The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.
Zero net emissions by 2050
Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.
Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.
She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.
Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”
A worldwide shift to renewable energy
Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.
Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.
Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.
Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.
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