@ Climate Week NYC: How can business overcome the sustainability stalemate?

Lizzie O’Leary: Hello, and welcome to a brand-new series of Take on Tomorrow, the podcast from PwC’s management publication, strategy and business. I’m Lizzie O’Leary, a journalist in New York.

Ayesha Hazarika: And I’m Ayesha Hazarika, a writer and broadcaster based in London.

Lizzie O’Leary: To kick off the series, we’re doing things a bit differently. Take on Tomorrow will be bringing our listeners to New York and Climate Week 2023. But first, let’s take a quick look ahead at what else is coming up in the rest of series two of Take on Tomorrow.

Ayesha Hazarika: We’ll be talking about AI, skills, climate, and many other areas where business can play an important role in helping solve the biggest challenges facing society. I had a really inspiring conversation with LinkedIn VP Aneesh Raman.

Aneesh Raman: The labor market has always been broken, if you judge it by how effectively it has matched talent and opportunity. So that’s where skills-based hiring comes in. I would think about skills-based hiring as transparency. What is a transparent way for me to know if I have the skills that this employer needs or for the employer to know if I have the skills that this job needs?

Lizzie O’Leary: And I interviewed Google’s Chief Privacy Officer, Keith Enright, about a huge topic right now: generative AI.

Keith Enright: Any forward progress in technology involves some rational assumption of risk. And the way Google is thinking about that is okay, how do we proceed both boldly and responsibly because the promise of these technologies is just so overwhelming.

Ayesha Hazarika: We’ll also be talking about nature. I spoke recently with Johan Rockström, director of the Potsdam Institute for Climate Impact Research about why businesses should become “nature positive.”

Johan Rockström: You can no longer separate the ecological crisis from the climate crisis from the social, economic, and geopolitical crisis in the world. So whether you like it or not, you have to keep many balls in the air at the same time, period.

Ayesha Hazarika: But for this special episode, Take on Tomorrow will be on the ground at the largest climate conference of its kind.

Lizzie O’Leary: That’s right. PwC’s Sarah von Fischer is at Climate Week for us, and is going to talk to her colleague Will Jackson-Moore about what he’s hearing as he participates in Climate Week, as well as uncover some of the challenges and opportunities for businesses that get it right.

Ayesha Hazarika: Crucial issues that have never been more urgent. Over to Sarah.

Sarah von Fischer: Hello. I’m Sarah von Fischer from PwC, and this is a special live recording of Take on Tomorrow. I’m joined now by PwC’s Will Jackson-Moore, our global sustainability leader. Welcome to the podcast.

Will Jackson-Moore: Pleased to be here, Sarah.

Sarah von Fischer: So, Will, I want to start off with a question about, you know, what it’s been like to be here at climate week? What’s the feeling on the ground here?

Will Jackson-Moore: I think if I compare the kind of feeling on the ground to maybe last year is a recognition still that we absolutely aren’t moving fast enough, and we need to accelerate. But maybe some glimmers of hope as well. I’m hearing particularly in the renewable energy space, just the pace of acceleration of deployment of renewable energy solutions around the world is going probably faster than people thought. So that’s kind of part of that curve. And I think we often overestimate the initial pace of change and underestimate the medium-term pace of change, and I think we’re starting to see that now. But as I said, we are reaching some of those kind of vital tipping points. I think 1.5 is going to be super challenging unless we really, really move quickly. And the other takeaway is kind of the conversations around technologies — some really interesting discussions there.

Sarah von Fischer: Yeah, and the theme this year from Climate Group is “We can, we will,” which sounds, you know, really optimistic, but is that what you’ve been hearing as you’ve been in sessions and talking with people here?

Will Jackson-Moore: Yeah, and I think what really reflects the “we can,” for me, is a lot of the technology that we need to do or to implement is already there, particularly on renewables. And this is the kind of “no brainer” move. We need to really, really push hard on renewables around the world, which is a combination of providers of finance, the energy companies, the regulators, the utilities, all working together to get those renewables deployed quickly, as we approach and come up with concepts to deal with the hard-to-abate areas. I mean, combined with, we need to do a lot around the energy demand side. If you think about a lot of the conversations we have, it’s typically supply side: “How do we decarbonize electricity supply and energy supply?” You hear a lot less discussion around “How do we use energy more efficiently?” And so I am hearing more around that energy-demand management, which is absolutely crucial for us.

Sarah von Fischer: Yeah. And we’ll talk about that a bit more, but you know, the other half of the slogan is “we will.” And so that’s sort of the actions to be taken.

Will Jackson-Moore: The people in this room, they will. It’s the people who aren’t in the room which is the challenge, because I say there are some solutions, and we need to drive change. I think we are the catalyst to change. We’re the lucky ones who come to hear the really high-quality speakers, but we’ve got to go and disseminate that and drive action in, not just our work environment, I think the whole kind of ecosystem that we live in.

Sarah von Fischer: I want to switch gears a little bit and talk about regulation. We’ve had this conversation before that that maybe, you know, large corporations actually want more regulations. Tell us more about that, maybe when it comes to climate. Is that something that you’re hearing as well?

Will Jackson-Moore: Yeah, absolutely. I mean, it’s a highly unusual situation where you hear big corporations saying, “We would like to see more regulation.” I think they are kind of quite measured in what they say about where they would like additional regulation, but it’s specifically around climate. And I think the reason for that is the corporates who are here are generally the front-runners. They get this. They’re ahead of the regulation; they’re ahead of government. They are really wanting to drive change, not only through their their own organizations, but they’re kind of the more challenging Scope 3 emissions in their supply chains. And that they’re doing it, often at cost disadvantage to their to their rivals who aren’t here in the room and, therefore, they see regulation as a way of driving change more quickly, but they aren’t just being entirely altruistic. It gives them a competitive advantage because they’re already ahead of it.

Sarah von Fischer: All right. Well, I want to talk a little bit about a roundtable that you co-hosted. It’s called “How to navigate the messy middle to accelerate decarbonization today.” It’s kind of an interesting concept, this messy middle. It maybe means different things to different people about how you think of it. But what would you say that “messy middle” is? And tell us a little bit about that discussion.

Will Jackson-Moore: No. I mean, I think it’s a few different ways to interpret it. I mean, one lens for me is the fact that, in terms of the climate agenda, historically, it’s kind of been either a CEO conversation, because they’re responsible for kind of medium-term strategy, or as a chief sustainability officer kind of responsibility, because it’s kind of in their job description. However, what’s happening now is it’s moving right across the C-suite because in order to drive change, the whole organization has got to be brought into it. And that kind of messy middle between the chief exec and the chief sustainability officer is a big area of focus. And it’s really driving a change for the role of the chief sustainability officer. They’re no longer seen as the person who’s kind of like responsible for it. Their job is now to basically educate the whole C-suite, and their teams, in order to drive change, and support those C-suite members in driving the change down their own kind of sub-organizations because it’s correct that if you get, say, the chief operating officer bought in, they’ve got to get all their plant managers and their line managers and their supply chain, as well. And that’s kind of this, for me, this concept of the messy middle, brings it together.

Sarah von Fischer: And during that panel discussion, were there any key takeaways that you got? Did other people feel like they were caught too maybe in in the messy middle at this point?

Will Jackson-Moore: The big takeaway was demand side. A lot of the conversations we hear are about supply side, it’s about renewables, replacing fossil fuels. The best decarbonization is not to use energy in the first place. And that efficiency is a huge opportunity. Many, many organizations are easily going to save 10, 20, 30% of their energy just by using existing systems technologies more efficiently. That’s before you then get to the kind of light capex opportunities to reduce. And then beyond that, they’re kind of harder to abate, which does require some more significant capex. So that kind of three-tier approach really resonated for me in the discussion.

Sarah von Fischer: What’s keeping companies maybe stuck from doing that, or why aren’t they able to do that more easily?

Will Jackson-Moore: There’s lots of excuses, but basically there is no good reason why companies cannot be more energy efficient. It’s typically because it isn’t high up the agenda. People are usually more interested in launching new products, building new factories, moving into new markets. Kind of energy efficiency is not seen as particularly sexy. If you talk to most COOs, they all have energy-reduction plans kind of in the cupboard, on the drawing board. They just haven’t been implemented. One of the things that came out of the discussion is: Should large energy users have a chief energy officer whose job is to drive energy efficiency? There’s some pluses and minuses of that, but I think it’s a really interesting debate to have with the big organizations.

Sarah von Fischer: And I think that it actually does make business sense to do it, right? I mean, it can be a cost savings or even making money.

Will Jackson-Moore: Cost out is carbon out. The less energy you use, it improves your profitability, improves your CO₂ footprint. But we had an example from one large corporate who’d entered into some virtual power agreements, and they were making millions of dollars a year through putting in place those clean energy schemes. So, yeah, no — it absolutely doesn’t need to be “it’s profit or it’s decarbonization.” The most sophisticated organizations are driving both in parallel.

Sarah von Fischer: We touch on it a little bit, but what about the opportunities for business? Businesses that get it right, the ones that make those bolder moves a little bit earlier.

Will Jackson-Moore: That ties into this kind of whole debate around whether management teams who focus on this are meeting their fiduciary duties of driving profitability. I mean, for me, that the two things are not divorced. You don’t have a value plan over here, and a sustainability plan over here. The two are inextricably linked. You have a strategy, a business plan, a value creation plan that is sustainable, creating sustainable value. I mean, I think any asset manager management team who isn’t looking out ten, 15 years and seeing big climate risks, big energy risks, and if they’re not addressing that, really, are they creating value for their stakeholders?

Sarah von Fischer: And do you think that’s something that businesses are realizing a little bit more now — I mean, maybe this Climate Week compared to past years’.

Will Jackson-Moore: Absolutely, they are. Are enough of them recognizing it and are enough of them moving quickly enough? No. But, absolutely, it’s going higher and higher up the business agenda. And I think it’s kind of everybody’s agenda. I mean, you cannot have looked at the news this last six months and not thought something’s happening to our climate. I mean, the number of disasters, fires, floods. The planet is saying something to us, and we need to act.

Sarah von Fischer: So tell me a little bit about some of the new technologies that are maybe moving things along.

Will Jackson-Moore: Yeah, technology has a vital role to play. And I think what you’re starting to see is some of the technologies around renewables, batteries, mobility, they’re starting to get more mature now. So they’re kind of moving out of the venture capital phase, more into the growth and the mainstream investment phase. Yes, there’ll always be a big investment into battery technology to drive efficiency, and so on. So it’s not like it’s done. But what I mean is, as a concept, people are kind of understanding that more now. And I think that allows them more investment into those really harder-to-abate areas, kind of, we’re starting to see green steel investment. We’re starting to see technologies around cement, for example. I think the next wave is going to really be into into chemicals. Chemicals vary kind of depending on the hydrocarbon chains, but the more that we challenge people to come up with chemical solutions that aren’t as dependent on hydrocarbons, I think it’s got to be the next kind of frontier.

Sarah von Fischer: What’s your summary of what you you will be thinking about as you wrap up here and and go to your daily life and your daily job?

Will Jackson-Moore: I’ll go away with a degree of optimism around the acceleration in clean energy. So that for me is probably the biggest positive.

Sarah von Fischer: All right. Well, thank you so much, Will, for joining us here on Take on Tomorrow. We really appreciate it.

Will Jackson-Moore: Thanks, Sarah.

Sarah von Fischer: And that’s it for this special episode of Take on Tomorrow, reported live at Climate Week, here in New York. Join us next time, when we’ll be asking leading earth scientist Johan Rockström, “Why should every business be nature positive?”

Johan Rockström: So my advice would be for business leaders, don’t get too bogged down by that headwind. There’s a stronger tailwind. The tailwind is today so strong that the headwind should just be seen as, you know, when you’re out cycling and you’re cycling really well, you always have a bit of wind in your face, but you’re making speed. And I think that’s the question now. Keep the speed.

Lizzie O’Leary: Take on Tomorrow is brought to you by PwC’s strategy and business. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.

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