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Corporate sustainability 2.0 and Clean tech 3.0 - a winning combination in the age of Trump

Volvo 7900 electric bus | Credit: Volvo
Volvo 7900 electric bus | Credit: Volvo
  • James Murray
  • James Murray
  • @James_BG
  • 16 February 2017
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Behind the bleak geopolitical headlines, the catalysing effect of the Paris Agreement on the world's most influential businesses is beginning to be felt

What follows is an unashamedly optimistic take on the current state of things. Believe me, I am painfully aware of how this analysis could be steamrollered in the coming years, months, weeks, days, and hours by the gargantuan scale of the climate crisis, the Trump administration's loose, spray tan-slicked grip on reality, the amoral ingenuity of the pollutocrats who helped put 'The Donald' in the White House, and the ongoing global march of a scientifically and economically illiterate nativism.

However, having today taken the new book on climate change from HRH Prince of Wales, Tony Juniper, and Emily Shuckburgh very gently to task for being a bit Panglossian in its assessment of the green "Industrial Revolution" that is underway, it is also important to acknowledge they are on to something.

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While everyone's attention has been diverted in recent months by the end of season finale to American democracy and The Thick of It tribute act provided by a British government filled with Ministers who think Brexit will be a disaster trying to engineer said Brexit, something quietly remarkable has been happening at many of the world's most successful and high profile businesses.

In fact, 14 months on, it is starting to look like those breathless predictions that the Paris Agreement could mark a turning point in the global battle against climate change might just be justified.

As with all industrial revolutions the transformations that we are starting to see are being driven by three inter-locking spheres: politics, corporate leadership, and technology.

The political sphere is obviously facing an epoch-shaping crisis as the pragmatic leadership and settled world order that delivered the Paris Agreement faces the biggest challenge since the end of the Second World War. But even in the face of Trumpism, Russian hacking, and an ideological assault on Enlightenment values, the line is largely holding in defence of ambitious environmental policies. Politicians, even in this new era, can generally recognise where their interests lie and as such they accept that populations that can't breathe clean air and constantly fear flood waters will get pretty restive. The Paris Agreement and its underlying goals look relatively safe, regardless of what President Trump does next.

More important still, many of the world's most influential corporate leaders appear to have accepted not just the detail of the Paris Agreement, but the commercial and economic rationales that underpinned it. The carbon bubble hypothesis continues to reverberate around the fossil fuel and investment communities, defeating each and every attempt to dismiss it.

Meanwhile, as Juniper explained in his interview with BusinessGreen this week, household brands are engaging with sustainability in a very different way to how they were a decade ago, increasingly regarding it as the defining long term corporate strategy, rather than a marginal PR campaign.

Forum for the Future's Jonathon Porritt makes a similar point this month in a blog post on "corporate sustainability 2.0", detailing how an era of "dramatic disruption" requires businesses to deliver both deep decarbonisation and the wider "reinvention of capitalism".

Progress on both these fronts has been quietly accelerating in recent months as some of the world's most prominent businesses have signed up to the RE100 and science-based targets initiatives (SBTI). Every few days at BusinessGreen we report on another multinational firm joining these groups, whose dry acronyms disguise their genuinely revolutionary nature.

Just think about what these firms - none of which signs up to any sort of public commitment without having carefully weighed up the pros and cons - are committing to achieving. A group of the world's largest energy users have pledged to source 100 per cent renewable power within a matter of years. They are doing this because they recognise both the positive climate mitigation and reputational benefits that come with renewables, and the very real prospect they will deliver the lowest cost energy available over the next decade or so.

At the same time many of these firms have also embraced independently verified targets to deliver the steep emissions cuts required to keep temperature increases well below 2C. Crucially, these targets reach deep into their supply chains, which means, given the involvement of companies such as WalMart and Unilever, they extend across vast swathes of the global economy. Again, they have signed up to these ambitious goals because they recognise the long term risk mitigation and financial competitiveness that comes with deep decarbonisation.

These trends will be further strengthened by what Juniper rightly identifies as a renewed interest in co-operation and collective endeavour amongst the world's top businesses, as they recognise how the global challenges so neatly summarised in the UN's Sustainable Development Goals require a united response.

Which brings us to the third, and most important sphere: technology. Porritt suggests we are seeing corporate sustainability 2.0, but in the clean tech space I would argue we are entering iteration 3.0 (or perhaps a 1.5 release should be retrospectively added to bring the numbers in to line). Clean tech 1.0 got solar panels and wind turbines and electric vehicles and energy storage and smart grids and fuel cells and the rest out of the labs and into the wild. Clean tech 2.0, the lifespan of which varied significantly depending on the technology, saw these various products tested and piloted and trialled at varying scales, allowing for costs to fall and performance to improve. Clean tech 3.0, which is starting to emerge in some crucial markets, sees mainstream, competitive technologies deployed at scale.

This crucial phase is being reached in the regions where wind and solar now undercut fossil fuels on price (even before you consider fossil fuels' immense externalities). It is also evident in the drastic economy-wide improvements in energy efficiency experienced in many economies over the past decade, the emergence of circular economy models, and the accelerating adoption of electric vehicles. In other areas, we are seeing clean tech 2.5, where technologies such as renewables in certain geographies or smart grids still require a small degree of policy support to push them fully into the mainstream. However, there is encouraging evidence this cycle from laboratory through testing to large-scale deployment is speeding up.

Take two (on the face of it rather boring) examples from recent months: batteries and buses.

Batteries are a classic example of a technology that has taken decades to become an overnight success story, but the emergence of grid-scale batteries in the UK, US, Japan and many other markets has been one of the big under-reported business developments of the past year. The UK now boasts more than 3GW of energy storage capacity and at least 1,500 residential solutions. Not all of this comes from battery technologies, but it is here where costs are falling fastest, driven by Tesla's single-minded pursuit of low cost capacity. Grid operators and energy companies appear to have been convinced pretty quickly that this technology is viable and we are starting to see a sizeable pipeline emerge as the industry recognises modern storage systems can deliver reliable clean power at a competitive cost.

Similarly, the unglamorous world of buses is in the midst of a startling transformation. Operators have spent the past four or five years trialling first hybrid and then fuel cell and pure electric buses. The results are in and they conclusively demonstrate these technologies are good to go. In the past week alone London has added two more exclusively electric bus fleets and Volvo has secured a Belgium order for 90 electric buses. London Mayor Sadiq Khan says that from 2018 he will only order electric, hydrogen and hybrid buses, but don't expect the interest in hybrids to last that long. As battery performance improves and hydrogen fuelling infrastructure is deployed the lower running costs and improved air quality offered by zero emission fleets will see them become the default option.

And it will happen quickly. The vast majority of the bus fleet in the Belgian city of Namur will soon be plug-in hybrid buses capable of covering around 70 per cent of a typical 10km urban route with zero exhaust emissions. It is just one city, but the transition from fossil fuels to ultra low emission can be achieved in one product replacement cycle. Just as the IT industry exploded once large companies and public sector bodies became convinced of the merits of computers, the potential for exponential growth is much in evidence across the clean tech market. 

Significantly, these are not technologies that deliver incremental emissions savings or marginal reductions in energy costs. They are, as Porritt observes, "dramatically disruptive". From fuel cell powered hotels to renewables fuelled data centres, the evidence is stacking up that large scale emissions reductions are both feasible and desirable. It is easy to see how Carbon Tracker's recent projection that oil and coal demand could peak as early as 2020 is credible. It might end up being out by a few years, but current technology trends suggest it won't be out by much. As InnovateUK's former head of sustainability Richard Miller told me recently, the UK's automotive industry knows where it is going and it is towards a future with very few internal combustion engines in it.

There comes a point at which the political power enjoyed by incumbent industries switches from fossil fuel to clean tech incumbents, Miller argues. That point is fast approaching.

This rapid technological progress is making it relatively easy for the world's most astute corporate leaders to recognise what needs to be done, which in turn is reducing the political risk for politicians who want to enable and accelerate the low carbon transition.

Inevitably, there is a compellingly pessimistic counterargument to all of this. The urgency of the climate crisis means the journey clean tech has to make from being the preserve of progressive multinationals to a defining feature of every community on the planet has to be completed far faster than the digital revolution that preceded it. Trumpism and its allies in the Kremlin are unabashed in their desire to tilt markets back in favour of 20th century polluting technologies. Perhaps most significantly, the low carbon transition is likely to unleash fresh social and economic challenges that few people are yet to give serious thought to, such as automation-induced job losses and the privacy implications of smart cities in free and autocratic societies alike.

And yet, if the election of Trump and the rise of populism marks a political tipping point away from the rational internationalism required to successfully tackle global environmental threats, there are signs the business community is experiencing a simultaneous technological and managerial tipping point that could push the world's economy back in the right direction.

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