The Big Idea
Pledges to do something by 2050 here. Commitments to go green there. Are these empty promises? Are businesses really even trying? And who is holding them accountable?Meet Helen Clarkson, the CEO of Climate Group who is cracking the climate whip by building influential networks and holding organisations accountable. She talks about setting up Climate Week NYC, whether businesses are doing enough, pledges, a peek into the workings of big business and what a dynamic capitalist world could look like.
What is Climate Week NYC?
Climate Week NYC is to the climate movement whatNew York Fashion Week is to Anna Wintour. (Ironically, they both took place at the same time this year.)
Climate Week NYC is the biggest global climate event of its kind. It brings together the most influential leaders in climate action from business, government, and the climate community, in conjunction with the United Nations General Assembly and the City of New York.
What are businesses actually doing and is it enough?
“Any question on climate where I’m asked: ‘Is it enough?’ I’m always going to say no. The science is very clear. We’re not going fast enough. We’re not getting hard enough.”Helen Clarkson
You might already be jaded by greenwashing commitments, have been burnt by questionable sustainability claims à la Boohoo x Kardashian, or scoff at pledges to start doing something by 2050.
But before you write it all off, Helen says that “some of the big businesses have been at the forefront of making change happen.”
What’s the deal with the ‘We commit to do X by Y’ pledges?
Unfortunately, systems change doesn’t happen overnight. It takes time.
So why are companies making those pledges? Well, they actually have a secondary purpose. They’re what Helen refers to as “demand signals.”
A demand signal is a message to a supplier that goods or services are required. Texting my hairdresser that I need a haircut next Wednesday? That’s a demand signal. But it doesn’t have to be that outright either.
If a business pledges to run on 100% renewable electricity by 2030 it sends a demand signal.
“[When businesses pledge to make] 100% of their fleet electric vehicles, it sends a signal both to the supply side of the market, the automotive manufacturers, and also to policymakers to say: ‘business is here and ready to make this change.’”Helen Clarkson
Helen’s organisation, Climate Group, checks in on the businesses and asks them a few questions: how are you doing on your commitments? Are you getting there? If not, why not? What’s stopping you from going faster?
They then take the answers to those questions to policymakers to try to quicken the pace.
Let’s look at an example: electric vehicles.
In a market like the UK, more than 50% of new vehicles purchased in any year are bought by businesses. These are known as corporate fleets or “company cars” to you and me. They’re a huge part of the automotive market.
Corporate fleets like to stay fresh so those cars are generally used for 3-4 years and then get replaced. The cars being replaced are put onto the second-hand car market. That’s where your average person would buy their car from.
So if you want everyone to be driving an electric car by the end of the decade, you need companies to be buying new electric vehicles now. Because in 3-4 years, those cars will be on the second-hand car market and soon enough everyone will be driving one.
But why would businesses want to go electric? The cars are more expensive up front but the running costs are negligible compared to petrol-powered cars.
Climate Group takes all of these commitments and goes to the automotive manufacturers and tell them that the demand for electric cars is coming so they better get their skates on.
Case in the point: the UK committed to phasing out the internal combustion engine by 2030, which is one of the most ambitious targets in the world.
Levelling the playing field
If you think about it from the first-mover model, the stakes of being the first company to commit to electric cars or renewable electricity seem pretty high. What if it runs the business into the ground? Why should I make my vehicles electric while my competitor is happily driving around gas-guzzlers? Climate Group is about making the situation fair for everyone. So companies aren’t penalised for doing the right thing for the climate.
“People talk about first mover advantage. My mental model is everyone standing at the edge of the pool and wondering who’s going to jump and you get some leaders jumping, but actually what people really want is a level playing field. They want the rules of the game to be the same for everyone, because then they can innovate.”Helen Clarkson
Taking the gamble out of going green
Supply and demand is a little bit like chicken and egg. Without demand, there is no supply. But the only way to know if there is demand for something, is to supply it.
In Helen’s model though, it’s more like: “It’s like if you build it, we will come.”
Will capitalism have to shift?
This is systemic change in terms of addressing the climate crisis and the race to net zero, but it’s also about changing the way businesses interact with one another. So will we be living in some kind of capitalist utopia in the future?
“Capitalism is built around creative destruction. But everyone thinks they are Netflix, and no one thinks they’re Blockbusters [a place where you’d go and rent DVDs]. I was at a meeting with some oil execs who were saying that there’ll still be oil in the mix in 2050. I said: “But why do you think it’s your barrels?” Why is everyone assuming that they’re the Netflix here and not the losers? The more we can remind people that the world will be constrained for carbon in the next 10-30 years, the better. So what will your business be doing in 2040 or 2050?”Helen Clarkson
Until next time — stay curious!
Tune in to Climate Curious from Climate Week NYC with co-hosts Ben Hurst and Maryam Pasha to get a grip on the climate levers that big businesses pull behind the scenes, what dynamic capitalism is (hint: collaboration not cannibalism), and a look inside the organisation uniting businesses to drive demand on a global, systems level. Ultimately? It’s about building economic systems for change. Now that’s something we can get behind! Let’s get down to business.