The U.S. government’s newly passed Reducing Inflation Act will commit $370 billion to advancing energy renewal and reducing greenhouse gas emissions — the country’s largest investment to date in the fight against climate change.
As business and government leaders from around the world gather in Egypt this week for the 27th annual UN Climate Change Conference of the Parties, COP27, working knowledge Faculty members of the Business and Environment Initiative asked: How should business leaders seize this historic moment?
Here’s what they say:
Rebecca Henderson: Setting targets for emissions reductions and moving forward
“Set emission reduction targets. If they’ve done it, set milestones on the way to that goal. If they’ve done it, make sure the company is clearly on track to meet those milestones. If they’ve done it, Then explore what can be done within their industry to collectively reduce emissions.”
Rebecca Henderson (@RebeccaReCap) is a professor at John and Natty MacArthur University and author of Reimagining Capitalism in a Burning World.
John Macomber: Evaluating Investments Based on Long-Term Return and Risk
“Business leaders should be urged to ensure that the $369 billion allocated for energy security and climate change investments is actually allocated for investment. This means a one-time, zero-ROI grant for a specific return target rather than speculative technology or damage from past floods or fires Expenses with long-term benefits.
For example, upgrading power transmission lines and fossil fuel pipelines that consumers still need can achieve energy efficiency, improve energy security, reduce fire and leak risks, and pay off over decades.
More specifically targeting climate change mitigation, business leaders could propose that some of the Inflation Reduction Act (IRA) funds be used for low-interest, primary loans. They can pursue other financially critical energy efficiency (and carbon reduction) projects in transportation, power generation and home heating, and then attract complementary private capital so that deals that would otherwise be impossible to close can be done.
The dangers of wildfires, river flooding, drought and extreme heat appear to be growing. Business leaders can model capital investments to reduce risk in their own real estate and infrastructure portfolios—so federal, state, and local governments can use a portion of IRA funds to fund proven interventions. For example, these last investments might be fire protection, house elevation, water giants or white roofs and cooling centers, respectively. “
John Macomber (@cleantechcities) is a senior lecturer and co-author of Healthy Buildings: How Interior Spaces Drive Performance and Productivity.
Rosabeth Moss Kanter: Engagement at the City Level
“Metropolitan areas are increasingly at the forefront of climate action. They are home to large segments of the population and face costly threats from climate-related disasters, consuming 78% of the world’s energy and emitting 60% of the world’s energy, according to UN estimates of greenhouse gases. In my research on climate action in U.S. cities, however, business leaders are largely missing in the commitment, planning, and execution of local and regional climate goals.
Most cities can point to a few business practices: parking lot EV charging stations or shared bikes, roof gardens or trees on the ground, wind turbines, flood protection, etc. But they are often isolated one-off examples with limited impact. If enlightened leaders join forces, their collaboration can spur innovation, create new markets, or push governments to accelerate infrastructure projects, some of which have already allocated funds.
Alliances with business leaders are critical to encouraging the most innovative and helping the most disadvantaged. Climate tech startups need support from established companies—testing sites, referrals, and partners—to enrich the ecosystem and foster the development of more solutions, whether it’s energy-efficient technologies or inventions that directly capture and store carbon.
At the same time, coalitions should include climate justice advocates to ensure that areas most vulnerable to climate disasters, whose residents are often black and Latino, have low incomes, and have access to affordable renewable energy, building upgrades and electric buses . It can also help businesses achieve their diversity, equity and inclusion goals by expanding employment.
Business leaders must think beyond their own buildings to the communities that make their success possible. Getting the most impact from climate investments requires not just concrete infrastructure, but collaborative infrastructure. “
Rosabeth Moss Kanter (@RosabethKanter) is the Ernest L. Arbuckle Professor of Business Administration. Her latest book is Thinking Outside the Building: How Advanced Leaders Can Change the World One Smart Innovation at a Time.
Peter Tufano: Turning promises into reality
“COP27, dubbed ‘implementing the COP’, seems particularly fitting for a business community that prides itself on action. Given our rapidly depleting global carbon budget, this is truly a defining year of a defining decade.
Globally, we need to develop new technologies to slow and reverse greenhouse gas emissions. Fortunately, in the U.S., the IRA provides plenty of incentives and de facto industrial policy for this. We must turn our net zero commitment into reality. Despite the well-intentioned promises of many companies, implementation plans remain largely imperfect.
Recent Edelman research shows that while the public believes that business can have a significant impact on the climate, 64% of people in 14 countries believe business is “mediocre or worse” in delivering on our climate commitments, with coal, private equity, fashion , fast food, oil and gas were seen as least likely to “do the right thing in tackling climate change”. If we translate words and deeds into actions, we will build trust.
Finally, my own work looks at the climate alliance; we must increasingly find new ways of working together. Our adversaries are not our competitors, our enemies are not governments—our common enemy is the forces we unleash that threaten the future of the planet. “
Peter Tufano (@peter_tufano) is a Baker Foundation professor and senior advisor to the newly established Harvard Sarata Institute for Climate and Sustainability.
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