by Mike Gerbis, CEO of GLOBE Series

At GLOBE Series, we bring together people from industry, government and the non-profit sectors to accelerate the transition to the clean economy. GLOBE Forum is the world’s longest-running leadership summit for sustainable business, and is all about the conversations and transactions that need to happen to support this transition. In 2016, we realized that we could do more. That year we introduced the GLOBE Capital event, which addresses three specific and very important components of the clean economy: investment, infrastructure and innovation.

Why investment, infrastructure and innovation?

Reason #1 Opportunity, opportunity, opportunity

Before we get to the opportunity, we need to start with the risk. Climate change poses a very real challenge not just to our environment, but to our economy. Extreme weather events have long-term effects on property and infrastructure, investments, health, migration and security.

The risk associated with climate change is balanced with the opportunities associated with transitioning to a clean economy. Policy and market signals are coalescing, with products like renewables becoming cost competitive with or cheaper than conventional fossil fuels. It is estimated that the global clean technology market is currently worth over a trillion dollars. Building, rebuilding and maintaining infrastructure creates jobs and has the potential to underpin the long-term economic stability of communities.

We’re at a point of take-off in terms of investment, infrastructure and innovation. The financial community is realizing that climate change risk needs to be integrated into company valuations and investment decisions. We’re seeing massive investments in infrastructure by governments and the private sector around the world. These advances are not only in traditional infrastructure but, more importantly, in the infrastructure of the future – e.g., 5G, the Internet of Things, and micro-grids, to name a few.

These new areas of investment, in addition to growing markets for products such as clean technologies and artificial intelligence, are mind-blowing opportunities for Canadian and U.S. companies.

It’s the perfect time to bring the public and private sectors together so we can capitalize on the opportunities.

Reason #2 The old rules don’t apply anymore – we need to make new ones

Global and domestic momentum for clean growth seems irreversible, even in the face of U.S. federal opposition to climate action. The old rules were that we can’t protect our environment and promote economic growth at the same time. In some circles, those old rules still apply. In my view, that’s a short-sighted approach that will result in being left behind by economies like the UK, Sweden and Germany.

The advances that jurisdictions like California have made – driving up economic output while driving down carbon emissions – signals that there is a new set of rules in play. Here in Canada, our Minister of Environment and Climate Change, Catherine McKenna, often says, “We know that the environment and the economy go together.”

Not only that, but trends such as digitization, globalization, urbanization and changing demographics are influencing communities and economies around the world.

Transforming decision-making frameworks around infrastructure, innovation and investment to capitalize on this shift is an enormous opportunity for government and business in Canada and around the world. We need to re-think our rules and incentives to send the right signals to the market. Entrepreneurs in innovative sectors need access to long-term, ‘patient’ capital that will see them through long growth cycles and uncertain markets. Leaders and innovators will have to work across silos and sectors to collaborate on solutions never seen or thought of before.

We can do this. At GLOBE Capital, we can figure out how to do this together.

Reason #3 The decisions we make now and in the years ahead will have a profound impact on our future

Whatever we start now has to have the end game in mind. Plus, we need to think about creative ways to design, build, operate and maintain infrastructure with a low-carbon future in mind. For example, do we build a bridge to reduce congestion, or build a 5G integrated network downtown for autonomous vehicles? How do we integrate amazing emerging technologies into the design of new infrastructure? How do we retrofit existing infrastructure with technologies that make it zero carbon and fit for the future?

To come up with answers and solutions we need to think differently, collaborate across disciplines, and figure out how to creatively finance these projects. There is a ton of capital out there, how do we get it into the right hands?

GLOBE Capital is all about bringing the investment, infrastructure, and innovation communities together so we can answer these questions and shape this future together. We don’t just want to solve today’s problems, we want to plan for the future.

GLOBE Capital returns to Toronto on February 27-28, 2019.

Join leaders in finance, infrastructure and cleantech to discuss how to capitalize on opportunities in the clean economy.

Learn more

By investing in the Climate Investment Funds (CIF), advanced economies have helped the developing world more fully participate in the global energy transition. More than 300 projects later, Mafalda Duarte, who heads up the funds, is now looking to keep the magic going.

A decade ago, 14 nations—led by the United Kingdom, the United States, Japan, and Canada — came together and opened their cheque books to create the Climate Investment Funds. The now-USD$8.3 billion fund is helping 72 emerging and developing economies worldwide prepare for and — bounce back from — the impacts of climate change. Under Mafalda Duarte’s leadership, CIF has since distributed the funds as direct grants, looking into new mechanisms that will mobilize climate finance from capital markets.

You oversee funds that have helped millions of people prepare for today’s challenges those that lie ahead. What’s that like?

I’ve been working with CIF for eight years now, and have been leading the funds for the last four. It’s been an honor to work with a number of climate champions out there in the developing world, as well as with large financial institutions who have been willing to make different investment choices than they would have in the past. The work we do to support and empower champions working in renewable energy, energy efficiency, sustainable transport, water management, and agriculture is humbling, and a privilege.

How exactly do you help those champions?

We support the markets and business models that will help clear the way for these countries to achieve a low-carbon future. Part of this process is providing concessional finance in the millions, sometimes hundreds of millions, of dollars. Another part is looking at institutional and regulatory frameworks they operate within, and figuring out what changes are needed — and what assistance and technical capacity might benefit them. We help bring all the key stakeholders together. From a technical and political economy standpoint, regulatory reform changes are far from straightforward. We also make a significant difference in that we de-risk and lower the cost of capital. We do this for well-known technologies, such as wind, that are proven but have not seen enough investment in a given country; and for renewable energy technologies that have less of a track record, such as concentrated solar power.

Where have you made the biggest mark?

We’ve tried to help first movers, with Mexico being one successful example. In 2008, when we started, there was very little renewable energy investment, and that was of course the year of the global financial crash. We were in there, helping with the first deals that led to growth in the wind sector. In other countries, like Kazakhstan, we have helped change their renewable energy laws. We had a stake in their first solar and wind projects to demonstrate their investment viability, and we also learned a lot about how to enhance their regulatory framework to better support renewable energy sources.

CIF has completed more than 300 projects. Which one or two stand out for you?

One of the projects we’re most proud of is our intervention in Morocco, which resulted in the 500 MW Noor Concentrated Solar Power complex—that country’s first utility-scale solar energy facility. To make that happen, we pioneered a different financial structure. By being there with other development finance institutions, we gave confidence to a number of investors. Our contribution helped reduce the project costs by 25 percent. Concentrated solar power is still a costly, early-stage technology, but it has a lot of potential. Our intervention significantly reduced the level of public subsidy that was needed to get it done.

What mistakes have you learned from?

Given how carefully we assess each prospective investment, the lessons we learn are more about how we adapt our practices to respond to a given nation’s specific needs. For example, we have a big program in Nigeria. We realized early on that we wanted to facilitate loans to help consumers develop small-scale renewables. To do that, we needed to rethink the way we approached the local commercial institutions in that country. This included considering the types of the conditions that would encourage those institutions to develop credit lines for these businesses. The lessons we are learning are more around our practices, and how we approach project design.

Your team has developed some serious expertise on renewables in the developing world. How do you share those findings?

From the beginning, we knew we would be a true learning laboratory. We wanted to gather insights and share them widely within developing countries, but also internationally. Both our geothermal and concentrated solar power experiences provide lessons that developed countries can learn from. The same is the case with credit lines that we have helped structure in Turkey and Tajikistan. We link the countries together with international experts around specific themes, such as microgrids and off-grid solutions, or the role of women in the energy transition. We’ve had Cambodia and Zambia exchange practices on water management, and Brazil and Mozambique in forest management—they have similar challenges and also of course both speak Portuguese!  We bring them together, we ask them what they want to learn, what they need, and we structure the learning around that. It’s fundamental to our mandate.

You are based in Washington, DC, the seat of a government that is, at least federally, not committed to climate action, energy efficiency and renewables. What do you tell the nations you work with about the missing leadership at home?

No matter who we are speaking with, we have to make sure that our message is being heard and absorbed. The way you message, and what you say, your narrative, and the people to whom you choose to deliver the message is very important. People may seem to be at opposite positions, very far apart, but in the end they aspire to meet similar objectives. Nobody disputes the idea that more jobs are a good thing. Nobody disputes that industry-driving climate action is good. Nobody disputed the health benefits of clean energy—a lot of cities are facing serious air pollution problems. Nobody disputes that climate variability is there. We have to find ways of bringing people into the conversation.

This is a special year for the CIF in that it marks a decade since the fund was first established. What are you doing to recapitalize?

Our anniversary this year gives us an opportunity to really demonstrate the value we’ve added. When you work at the scale that we do, it can take years before you start to see impacts and results; now we have this really large portfolio of more than 300 projects in developing countries. We are gathering all this evidence and will be able to demonstrate the value and the importance of flexible toolkits and mechanisms. Watch this space.

Some say climate action needs less talk and, as the name implies, more action. But since our founding ten years ago, action is all we’ve ever done. Now is finally the time to start talking about the gains we’ve made and the progress still to come.

There will be representatives from more than 55 nations on hand at GLOBE Forum 2018. What is the one thing you would like them to remember, to keep in mind, about the Climate Investment Funds?

CIF began life at the height of the global financial crisis in 2008, when public funding was in some ways scarcer than it is today. Key to our success then, as now, was conveying the message that climate action is not only a worthy investment, but also a crisis that threatens nearly every aspect of our lives. It pollutes the air we breathe, fuels the natural disasters that destroy lives and livelihoods, hastens the spread of disease, and disrupts ecosystems as well as natural resources. Think of water scarcity. The sooner we think of climate change as an all-encompassing challenge – and one that jeopardizes our way of life – the sooner, I hope, we will marshal the necessary resources to address it.

CIF is just one part of the solution. This is a responsibility we all share, whether you’re an elected official, an activist, or an everyday consumer. Because we all have a stake in a climate-smarter future.

Image: Morrocco’s Concentrated Solar Power Plant Noor-Ouarzazate, www.climateinvestmentfunds.org

GLOBE Capital returns to Toronto on February 27-28, 2019.

Join leaders in finance, infrastructure and cleantech to discuss how to capitalize on opportunities in the clean economy.

Learn more

Scott spent a decade working in Silicon Valley as a tech entrepreneur and venture capitalist. A believer in the power of innovation to solve big problems, Scott decided to apply his expertise to energy and resource systems in 2004. After co-founding McKinsey’s Clean Energy Practice advising hundreds of leading companies, many governments, and a number of the largest institutional investors in the world, in 2014 Scott helped start Generate Capital, a San Francisco-based infrastructure investment and operating platform.

What sets Generate Capital apart from other financing companies?

We’re a balance sheet business, not a fund management platform, which is a novel alignment model with investors. It also provides substantial flexibility in the way the company can support its investments and its partners. We recently raised USD$200m worth of institutional equity led by our new partner, Alaska Permanent Fund Corporation, to add to prior equity and debt capital raised since the company’s founding.

Generate Capital has found its niche as the capital partner for the ‘Resource Revolution,’ a phrase we coined at McKinsey. The Resource Revolution is all about doing more with less, particularly with respect to natural resources. This kind of productivity equation has propelled economic growth for centuries. We’ve seen it in the Agriculture Revolution, the Industrial Revolution, more recently in the Digital Revolution – all of which were more focused on labor productivity – and now we’re seeing it in a fourth revolution…the Resource Revolution.

For us, that translates into investing in small-scale energy, water, waste and agriculture infrastructure projects that, despite being the most economically efficient, tend to be ignored by most traditional sources of capital due to their size, maturity, and complexity.

What are the signs that the Resource Revolution is happening?

In the energy space, we’re seeing signs that it’s happening in something as simple as the increased fuel economy of internal combustion engines. But there are more dramatic improvements. A great example is building efficiency improvements that we’re seeing across the U.S., and particularly in places like Japan where energy has been a scarce resource for a lot longer.

We’re also seeing the Resource Revolution in the growth of the renewable energy sector. More than 50% of growth in energy production capacity added to the grid in the last several years has been renewable energy. And in food and agricultural systems, we’ve seen great productivity growth associated with new fertilizers and agricultural inputs, new ways of irrigating crops, and new crop rotations…all of which are designed to increase the yield from the land.

What are the biggest opportunities in the clean energy economy for investors?

There’s going to be a tremendous amount of capital deployed in renewable energy, especially in distributed energy opportunities around solar and energy storage.

Transportation, specifically electric mobility, is also attracting a lot of attention, and it’s not just Tesla offering electric vehicles to consumers anymore. Municipal bus fleets are converting to electric transportation, and many major global economies are outlawing petroleum-based vehicles.

This is happening very quickly in places like the UK, France and China. China, as the biggest driver of demand for the automotive sector, is really signalling to the rest of us how the future infrastructure of the world will be built.

When looking at tomorrow’s clean energy investment opportunities, check out what China is doing. Their market signals not only attract attention, but significant capital.

What are the biggest barriers to a full transition to the clean energy economy?

If you think the clean energy economy is going to happen tomorrow, you’re going to be disappointed. There are really two major barriers:

1. How long it takes to refresh the infrastructure
2. Incumbent inertia within the existing system

The world’s energy and resource infrastructure has taken the past 100 years to build, and that is very hard to change. In places like the U.S. and Europe, low population growth and low economic growth translate to slower building of new infrastructure, though there is an aging infrastructure that needs replacing but will take some time.

But in China and other emerging countries, where both economic growth and population growth are much higher, and pollution becoming a much bigger, more noticeable problem, there is a more urgent need to build more efficient infrastructure.

There is also a lot of inertia within existing systems and, as always, existing players who are threatened by the transition to a clean energy economy are putting a lot of money into policy advocacy and other barriers that protect their position as the incumbent.

How can players in the clean energy economy harness the huge amounts of capital available?

There is a lot of discussion about the “clean trillion” in the sustainability world…the notion that we need a trillion dollars a year to go into the clean economy to solve our sustainability challenges. I take a slightly different angle on this question. I believe the trillion dollars and then some is already out there, ready to be deployed into good projects with good returns. The challenge is that the people asking for the money lack the strategy, structure and team that would build trust with the asset holders and thus cannot mobilize the capital.

GLOBE Capital returns to Toronto on February 27-28, 2019.

Join leaders in finance, infrastructure and cleantech to discuss how to capitalize on opportunities in the clean economy.

Learn more

Cloud computing. Augmented intelligence. Blockchain. The business landscape is changing rapidly, observes Rebekah Eggers, IBM’s Global Water Lead. She also believes that new tools open up endless possibilities in the water industry

What are the current threats and opportunities for the water industry?

Our clients include major utilities and cities, and they are really focused on securing a safe water future. To us, that means working to establish the ecosystem necessary to plan, design, and develop adaptive and resilient measures into solutions that will ensure sufficient clean water for all in perpetuity, based on sustainable management and use of water resources and water infrastructure. These cities and companies are inherently very risk-averse, but they’re facing a water landscape that is undergoing massive change. Technology is evolving, stakeholders are expecting more, and water infrastructure is aging—along with the people in the industry that oversee it. Our clients are having to reinvent how they do business. They’re regularly making extraordinary things happen, against all odds. I get to work with some incredibly visionary leaders.

We hear a lot about the challenges cities face with aging infrastructure. How can better data help rusting water pipes?

Utilities, cities, and regional governments don’t always have the funds to replace infrastructure outright; they often need to use their existing infrastructure more strategically. Our Intelligent Water software helps them manage pressure, detect leaks, reduce consumption, mitigate sewer overflow, and better manage infrastructure, assets, and operations. It adds a layer of “digital intelligence” to water infrastructure, bringing together data that is often otherwise stuck in silos, and puts it to work. Our clients use it to optimize their resources; it gives them finer control over assets and maintenance, and helps them with asset investment planning. By harnessing data, they’re able to prioritize and also maximize the capacity of existing infrastructure. We identify which pipes are most likely to break next year; and we helped one agency save over $100 million in capex by showing them how they could better configure their existing CSO system rather than building a new one. Other clients have reduced capex needs by 10% or more.

The theme for GLOBE Forum 2018 is ‘disrupting business as usual.’ What technologies are doing that in your world?

Three groups of technologies come to mind: Cloud computing, cognitive computing, and the blockchain. With cloud computing, processing can and does happen anywhere. Already, we have smart water systems where sensors are monitoring water quality at fixed intervals. If the system detects an anomaly—something that isn’t supposed to be there—it can automatically increase sampling rates.

Cognitive technology is allowing us to ask more questions. We don’t call AI “artificial intelligence,” we prefer to say “augmented intelligence.” Our position is that AI is more of a symbiotic relationship—it’s not “man against machine in the battle for our jobs.” The magic is in the people who are training the machines to learn.

Finally, blockchain, or distributed ledger technology, allows people to interact instantly based on mutual trust, and without any central monitoring body. In the context of the water industry, you can imagine what opportunities this technology could enable when it comes to shared processes such as water trading or managing home water purification in the distant future.

Can you give us a hint?

If home or decentralized water treatment takes off as we are starting to see in places like Australia, blockchain could potentially be used in validating when someone contributes purified water back to the system, or validating that waste water has or has not been treated. A new business model could emerge here. But it has a more immediate role with things like water wheeling and water trading—automatically validating that water was or was not supplied as contracted and that payment was made accordingly.

In some industries, we’re seeing not just the power of the cloud, but the power of the crowd. Is that happening in the water industry?

I think it will be inevitable. In 2015, when IBM acquired the Weather Company—the company behind the fourth most popular app in United States—we also ‘adopted’ the Weather Underground, a community of more than 300,000 amateur meteorologists. They feed data from their own home weather stations into the company’s forecasting engine, which now runs on IBM’s powerful cognitive and analytics platform. The system processes 26 billion inquiries through its cloud-based services each day. Now imagine if we had a similar approach to measuring water quality in our homes. Many people have water treatment units in their home. What if all of them were connected, and able to share data? Residents and businesses could consume water with confidence and providers would be aware of issues in near real time, enabling more timely issue resolution. I believe that we can make a huge difference if we empower people with information.

You’re based in Los Angeles. Other than sampling our incredible tap water, what are you hoping to accomplish when you join us in Vancouver?

GLOBE Forum 2018 is an incredibly important opportunity for the industry to come together and share expertise. When projects, departments, agencies collaborate and share information, when vendors like IBM come together with competitors and others, in a business ecosystem to solve a problem, we get closer to that vision of a bright future. That happens when we put all our power, and all our effort into the same challenge, and that’s what GLOBE Forum is all about. We’ve only just begun to uncover what is possible. Let’s work together to drive real progress in our world!

This article is part of our new six-part content series, “Echoes of the Forum”, which provides exclusive videos, interviews, and key takeaways and actions from our world-leading sustainable business event – GLOBE Forum.

Our third chapter focuses on the role that materials and resources play in the transition to a circular economy.

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Individuals, communities, governments, and businesses all have a role to play in protecting our most critical resource: our oceans. Dune Ives explains.

A psychologist by training, Dune Ives has spent most of her career focused on change management. As Executive Director of Lonely Whale, a non-profit incubator that drives impactful market-based changes on behalf of our ocean, Dune and her team develop campaigns to bring awareness to ocean health. In September 2017, Lonely Whale’s Strawless in Seattle campaign resulted in 2.3 million single-use plastic straws being removed from the city.

Talk us through the major issues around ocean health that we face today…

I would say at the top of the list, and it may sound odd to start here, is human complacency. As a species we’re out of touch with the oceans, when in fact they are our life support system. We stand by, either because we’re unaware, or because we don’t know how to get involved in issues that impact us every day. These include deoxygenation, which we should all be worried about since we get a lot of our oxygen from the ocean, and over-fishing – over 90 percent of our global fisheries are fully-fished or over-fished.

Another issue is the extent to which our oceans are being polluted by waste such as single-use plastics, and the impact that’s having on marine species. We’re reaching a level where pollution is starting to destroy the oceanic environment in ways that may be difficult to come back from.

What can be done to improve the health of our oceans?

At Lonely Whale, we’re firm believers that the market will lead the way. As general citizens we can rise up, make our voices heard, and make decisions every day that will have a positive impact – such as using a reusable bag at the grocery store. Policy change has an impact as well. But policy change isn’t typically accompanied with the significant resources we need to ensure policies are enacted at a local level. That’s why we believe market-based solutions are the only way forward.

There is currently a great opportunity for market innovation around single-use plastic replacement. And how about technology that enables us to better understand replenishment opportunities with fisheries? Now is the time for market leaders to step in, either with a vertically integrated solution or as a standalone innovation, and fill in the gaps. An example is an initiative called Nextwave, which Lonely Whale is convening alongside Dell to create the first cross-industry, commercial-scale global ocean bound plastics supply chain.

Do you have any advice for businesses that want to help?

There are two pieces of advice I would pass along to business leaders. The first is to become informed. There is a significant amount of data available that can help a business leader not only understand the issues, but realize where their company’s unique value proposition might fit in the ocean health conversation.

The second is simple. Just do something. Start somewhere. Why does Dell, a global tech giant with seemingly no relationship to the ocean, get involved in solving marine litter? Dell became aware of the issues and was so compelled that it couldn’t help but get involved, inspiring other corporations to also look at how ocean-bound plastics are integrated into products. Dell now spearheads a cross-industry global initiative that will solve a significant portion of the marine litter issue.

How does Lonely Whale integrate technology into its ocean health initiatives?

Let’s use the example of Nextwave. We’re processing materials collected from river and coastal areas for use in products and packaging. There are going to be many advancements in technology as we work with engineers from Nextwave companies and figure out how current practices need to be modified to better acquire, process and integrate materials into existing products.

We can also leverage existing technology and apply it in new ways that help people better understand ocean health. In our collaboration with Dell, for example, the tech giant leveraged their virtual reality (VR) expertise to create a 4D story that brought to life the issue of marine litter from the vantage point of a whale navigating the world’s oceans.

What would you like to say to GLOBE Forum delegates?

There is a place for everybody in the conversation about ocean health, and it doesn’t require a significant investment. Everyday we make decisions that make a difference. Every single step forward – either as an individual, a community, a government, or as a business – is necessary to protect the most critical resource we have on the planet: our oceans.

If they de-oxygenate, if there’s no more krill left to feed the whales, if plastic pollution continues to impact the health of coral reefs, it won’t matter how much profit we make and it won’t matter how impressive our revenues are, we will experience the effects of an unhealthy ocean in our lifetime.

This article is part of our new six-part content series, “Echoes of the Forum”, which provides exclusive videos, interviews, and key takeaways and actions from our world-leading sustainable business event – GLOBE Forum.

Our third chapter focuses on the role that materials and resources play in the transition to a circular economy.

View content

Companies that want to change the world need to be a meaningful part of the solution—and not just a smaller part of the problem. Sally Uren, CEO at Forum for the Future, explains.

What can business leaders do to address social and environmental challenges within their organizations?

I’m going to push back a bit on your question, and suggest that business leaders actually need to look beyond their organizations and consider how their companies can put more back into society and the environment than what they take out. At Forum for the Future we call this ambition “net positive”—the state in which you are not only ensuring economic viability, that is, you are making money, but you are also making the world better—ecologically and socially—than it would be if your business did not exist. I say this because the fact is, the stocks of our natural assets and societal assets are dwindling and we need to rebuild them. We just can’t assume business as usual will deliver the sustainable development goals anymore.

That sounds like a tall order, and perhaps a bit tricky for some companies to wrap their heads around. Are some better positioned for this approach than others?

At Forum For the Future, we tend to engage with businesses that understand that success comes from solving complex sustainability challenges in a way that builds value back into the business. Beyond that, I would look for willingness in the company’s leadership to embrace the four principles that we think of as kind of prerequisites for a net positive company.

And those are?

Well, first there’s materiality. Where can your business can make a big positive social and/or environmental impact? What are the big levers you have to work with? Second, transparency. Are you willing to speak openly and honestly about those challenges, and how as a business you’re addressing them? Then there’s regeneration. Where are those opportunities to restore damaged ecosystems, to actually rebuild some of the systems that we rely on? Finally, a company needs to be prepared to embrace systemic thinking. It needs to really understand the system it operates within, and address social and environmental challenges such that it builds resilience.

You’re talking about characteristics that may already be hard-wired into a company’s culture. For example, a brand built on confidentiality and discretion may have a hard time really embracing transparency. It sounds like this is about the people, the leadership, the tone they set, and the culture they create?

If an organization really wants to embrace sustainability, it is going to need to embrace a shift in mindset and culture. Companies and organizations need to really understand that their ability to drive value is inextricably linked to these big environmental and social challenges. And that actually helping to restore the systems that we rely on is a fast track to long-term value creation.

Tell us more about the systemic characteristic of a net-positive company. How might that play out in the real world?

Let’s say you run a business in the agricultural  system. Clearly, you’re heavily reliant on the productivity of crops, and access to raw materials such as seeds, and water, and healthy soils. And, if as a business you don’t really understand how that system works and what it’s going to take to secure your supply over the long term, then, actually, there’s a really significant threat to your business. One of the projects that we run at Forum for the Future is called Cotton 2040, where we’re working with a range of apparel brands, retailers, standards bodies—essentially, everyone—to bring them together to “mainstream” sustainable cotton. The organizations involved in that project understand that their financial viability is already linked to the vibrancy and resiliency of the cotton system.

Why is it a cotton system, not a cotton industry, or sector?

Industry doesn’t really adequately capture the complexity of value-creating relationships which underpin the delivery of goods and services to market. A sustainable cotton system that is climate resilient and delivering sustainable livelihoods to millions is much more fit for the future, and far better positioned to deliver on the United Nations Sustainable Development Goals. So, we can create what we would call systemic change by understanding the levers that might create a new way of operating, a different way of interacting. And that’s what business leaders should be driving for. With incremental change, we’re not addressing the root causes of challenges, we’re just putting bandaids on some of the systems. That isn’t going to deliver the sustainable development goals.

Why did you choose to focus on cotton?

Cotton is ubiquitous, it is in most of the clothes that we wear, and yet it is associated with some really significant sustainable development challenges. It has environmental challenges because it can be quite a water hungry crop, and is also grown in parts of the world likely to be significantly impacted by climate change. There are also big societal challenges with respect to working conditions, living wages, and so on. We also came to this system out of a recognition that there are efforts already underway in the cotton system, but they’re not necessarily “joined up.” If we find a way to link these existing activities – for example, by harmonizing the language between all the different,cotton standards – then perhaps we can create a blueprint that we can replicate across other commodities.

Are we seeing more collaboration between competing brands on sustainability. If so, why?

It’s taken a while, but many businesses are starting to recognize that many challenges—particularly supply-chain challenges—are just too big for one brand to tackle solo. There are areas where you can use sustainability to compete and to differentiate your brand. However, when we’re tackling issues as complex as labour rights, climate adaptation of a global crop, like cotton, then actually brands need to collaborate.

Could blockchain help ensure supply-chain accountability in an industry—sorry, a system!—like cotton?

I’m convinced blockchain will form at least part of the future of supply chains, and it also has applications in finance. It’s effectively just an open ledger that allows transactions to be recorded in a completely open and secure fashion. So yes, it allows us to deliver complete transparency through a supply chain. But it might also be used to deliver access to capital and to reduce the price exposure that smaller players face in buying commodities. Blockchain won’t solve all of our challenges, but I do feel it can help us get closer to sustainable supply chains.

What other emerging technologies are on your radar these days?

I’m quite intrigued in the potential to merge blockchain with the internet of things. So blockchain, actually as an open ledger, gives you transparency. If that open ledger can talk to the internet of things, then you potentially end up with a much smarter supply chain. I’m also really intrigued by this trend we are seeing where distributors can become “light manufacturers,” meaning we may no longer be so reliant on large-scale manufacturing. The technology is now there to move from globalized infrastructure to much more localized infrastructure. Digital printing has really evolved over the last few years and is now used in many different applications. There are lots of ways in which the way goods and services make it to market could really radically change.

I’m curious about what advice you offer organizations and leaders who are ready to take on a net-positive approach.  How do you message this stuff?

Communicating sustainability is no different than communicating anything else. It’s about good storytelling, and about making people feel good, and speaking to their aspirations. Don’t appeal to gloom and doom—the sense of what we stand to lose. Rather, appeal to people’s desires to live better. This is about making people feel good about what they’re doing. People don’t want to be told what they can’t do; they want to hear what they can do.

This article is part of our new six-part content series, “Echoes of the Forum”, which provides exclusive videos, interviews, and key takeaways and actions from our world-leading sustainable business event – GLOBE Forum.

Our second chapter focuses on the role of business in accelerating the clean economy.

View content

In 2015, 193 countries adopted the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs). The aim? To achieve a prosperous, inclusive and sustainable society for all by 2030. Kevin Moss, Global Director of Sustainable Business at World Resources Institute (WRI), outlines how businesses that are making a head start in implementing the SDGs are carving out a distinct advantage.

What kind of impact have the SDGs had on the business community?

The SDGs accomplish two things: they align and interconnect social and environmental priorities such as poverty, inequality, and climate change; and they provide businesses with clear guidelines and targets for addressing them. This has been very valuable to the business community, who are now embracing the idea of “okay, now we know what we need to do.”

The goals have also created a common language for describing key challenges that need to be solved holistically. For forward-looking companies, they lay out a comprehensive road map for tackling global challenges and, in so doing, identify the biggest business opportunities ahead.

What competitive advantages are gained by companies who champion and integrate the SDGs?

Getting ahead of market opportunity is the biggest potential advantage. Better Business, Better World, by the Business and Sustainable Development Commission, identifies $12 trillion worth of business opportunity in the SDGs, from large-scale technological reform in farming to electric vehicles and car sharing. The SDGs point towards key future markets, and delivering products and services that meet the needs of these markets will drive competitive advantage.

The level of international consensus for the SDGs is unprecedented – it’s been decades since so many countries have agreed so quickly to anything. Governments of the world are saying to the business community that “this is the future.” Businesses that aren’t aligned to this market opportunity , are investing in yesterday’s markets instead of tomorrow’s.

Can you tell us more about future markets and opportunities associated with the SDGs?

The opportunities range from agricultural efficiency, renewable energy and water solutions through education and health, and span both the developed world and emerging or low-income economies. The most exciting opportunities are at the intersection of social and environmental needs – bringing renewable energy to those experiencing energy poverty, improving nutrition for those struggling with hunger – because they create markets that improve lives while reducing impact on our severely stressed natural resources.

These intersections offer fantastic growth opportunities for companies that embrace them and the investors that support those companies. Markets will shrink for companies who utilize natural resources to provide products or services that are of limited societal value.

What challenges do companies face in implementing the SDGs?

The sheer scope of 17 SDGs and 169 tasks is hard to get one’s head around. The temptation is to believe that, by simply mapping what you are doing to contribute to the SDGs, you are doing better. But the reality is, mapping your activities is not the same as fundamentally changing your business model. Going beyond simple mapping, and addressing the true spirit of the SDGs – providing products and services that improve lives and, in parallel, reduce our impact on the planet – is the real goal.

How can companies better communicate the SDGs across different levels of their business?

There are two things businesses can do. First, emphasize that the SDGs are not only great for society and the planet, but they are a tremendous business opportunity.

Second, don’t focus too much on addressing the individual goals. Instead, connect all the SDGs together into a single narrative. The SDGs aim to raise the well-being of society, within the constraints of the planet’s resources. That’s what the SDGs are all about – how you are contributing towards the bigger global mission, rather than just thinking “have we reduced our water usage?”

What can you tell us about the Science Based Targets (SBT) Initiative?

Let me use climate as an example. SDG13, “Climate Action,” doesn’t specify the amount of carbon reduction. It points directly to the Paris Agreement, which says we must keep the global temperature rise to below 2 degrees Celsius, and ideally aim for 1.5 degrees. This is a global-level goal, but is of limited value to a specific company. The SBT Initiative defines methodologies and pathways for individual sectors and businesses to achieve the global target of 2 degrees, or better. With SBTs, a business no longer has to guess how it can do its part to meet the global target – there is a defined methodology that sectors can follow.

The SBT initiative also provides businesses with a longer-term objective, and the ability to implement transformational solutions for reducing carbon emissions. By thinking “what do we need to do by 2030 or 2050,” businesses can break away from making incremental changes and put in place the right components of a long-term solution now.

What are you most optimistic about in terms of how businesses are responding to these initiatives?

At GLOBE Forum I moderated a panel with Gwen Migita, Chief Sustainability Officer and VP Social Impact at Caesar’s Entertainment; Neil Hawkins, Chief Sustainability Officer at Dow; and Brent Bergeron, EVP of Corporate Affairs and Sustainability at Goldcorp Inc. As early adopters of the SBT Initiative, they are all SDG-fluent and their companies are taking on leadership roles – from providing low-impact supply chain solutions, to educating their employees on environmental topics, to developing products that are aligned with the aims of the SDGs. We’re only at the beginning of this journey, and as the SDGs are increasingly adopted across government, society and the private sector, I’m becoming more and more confident that we are enabling upwards of 10 billion people to thrive together on our one and only planet.

This article is part of our new six-part content series, “Echoes of the Forum”, which provides exclusive videos, interviews, and key takeaways and actions from our world-leading sustainable business event – GLOBE Forum.

Our second chapter focuses on the role of business in accelerating the clean economy.

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Blockchain is a series of data transactions. These transactions are added chronologically as blocks, making up a chain requiring validation by other parties. The data in these blocks can’t be erased or altered, as a result, blockchain is a distributed ledger which is secure and un-hackable. Though commonly associated with Bitcoin and other cryptocurrencies, blockchain technology offers immense opportunities in the field of sustainability.

At GLOBE, speakers and participants discussed four different environmental applications that blockchain could have across various industries, including: recycling, energy, and materials and resources:

• Plastic Bank: Tackling plastic waste and global poverty
• LO3 Energy: Bringing power to the people
• Xpansiv: Transforming the global commodities market
• Consensas: Confidently sourcing natural resources in conflict-affected areas

Plastic Bank: Tackling plastic waste and global poverty

Working with IBM and The Cognition Foundry, Plastic Bank has created a social enterprise which rewards community members for recycling plastic. Operating in Haiti as of 2015, it follows pilots in Peru and Colombia. Community members, often those living in low-income and impoverished conditions, collect plastic and drop it off at a local Plastic Bank processing centre. Using an app, they receive token payments in exchange for the collected plastic. These tokens are kept in a digital wallet that is blockchain securitized (thanks to IBM’s LinuxONE), and can be exchanged for cooking fuel, access to phone chargers, toiletries, and other necessities.

Plastic Bank is currently scaling the model so communities around the world can start creating their own plastic ecosystems. By giving plastic monetary value, the Plastic Bank team is incentivizing the collection of recyclable material and ensuring it doesn’t end up as ocean plastic. The team is currently developing plans for expansion into China, Vietnam, Thailand, and the Philippines, among other countries.

Through partnerships with corporations interested in buying the recycled plastic, such as Henkel, Plastic Bank is also enabling big brands to develop more sustainable packaging for consumer products.

LO3 Energy: Bringing power to the people

Through their Exergy platform, LO3 is disrupting centralized power systems by introducing innovative local micro-grids – localized groups of electricity sources and loads that are often connected with the traditional centralized electrical grid. Through blockchain technology, users of the micro-grid can harness, monitor, and exchange energy within their own community. Blockchain not only securely captures the transactional data, but also empowers people to instantly choose how they want to use the energy in their homes, based on real-time price signals.

Applications of LO3 Energy’s blockchain technology are being implemented around the world, in partnership with Siemens. The most prominent example is the Brooklyn Microgrid, which has given home owners and local businesses the ability to become prosumers, producers, and consumers of the local grid’s affordable renewable energy. Other LO3 Energy projects are being developed in South Australia, Germany, and the United States.

Xpansiv: Transforming the global commodities market

Xpansiv is transforming the global commodities market, which so far has relied heavily on manual approaches for data processing. Driven by a concern over climate degradation, Xpansiv created the Digital FeedstockTM, a digital representation that can be used to track the environmental cost of every unit of energy produced.

Through the creation of the Digital FeedstockTM, Xpansiv leverages distributed ledger technologies to analyze and refine the production data of commodities. This data-driven approach unlocks the true value of each commodity by “de-commoditizing” it, and creating a unique “fingerprint” for each unit of production, which is then published on the blockchain.

Joe Madden, CEO at Xpansiv, believes tracking the environmental impact of commodities through the supply chain in this way, will help consumers make informed decisions regarding the impact of the commodities they purchase. Madden also hopes it will not only help global markets determine whether certain commodities have a high-carbon or low-carbon cost, but also price that environmental impact into the commodity itself.

Consensas: Confidently sourcing natural resources in conflict-affected areas

Companies extracting minerals in conflict-affected areas are under increasing regulatory and consumer pressure to address supply chain risks such as corruption, human rights violations, child labour, gender-based violence, and environmental degradation. Drawing upon key elements of blockchain, Consensas created a system for the mining industry that follows all mining materials through the supply chain. It automates the collection of data required for investor disclosures, compliance and assurance reports on a secure and encrypted platform.

Working with non-profit, IMPACT, Consensas is adapting its technology to help industry ethically source natural resources in conflict areas, while compensating women and men in local artisanal mining communities for providing information on how materials are sourced and extracted. IMPACT’s Just Gold project is the first to successfully bring traceable, legal, and conflict-free artisanal gold from Democratic Republic of Congo to the international market, using a traceability and due diligence system, powered by Consensas.

This article is part of our new six-part content series, “Echoes of the Forum”, which provides exclusive videos, interviews, and key takeaways and actions from our world-leading sustainable business event – GLOBE Forum.

Our first chapter focuses on the role of energy leaders and technology in accelerating the clean economy.

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Whether you think Artificial Intelligence (AI) poses an ethical dilemma or is a force for social good, as tech giants continue to heavily invest in it, AI is expected to play a very big role in our future. Those who control the data will be the ones who make the most industry headway, says Milind Tambe, Professor of Computer Science at University of Southern California, and Co-Director for Centre of Artificial Intelligence and Society.

What is AI?

There is no official definition. That said, AI could be defined as “the science of making computers do things that require intelligence when done by humans”.

We encounter it daily. When we start typing what we’re looking for into a search engine such as Google, it automatically completes the string and makes suggestions – that’s AI. So are Netflix recommendations and voice recognition in smart phones.

The example of AI that’s getting a lot of attention right now is the driverless car. The computer system in these vehicles uses sensory data collected from the driving scene, such as nearby cars, pedestrians, and road signs to make driving “decisions.” But there are challenges in predicting human behaviour. Tragically, the first reported fatal crash involving a self-driving vehicle and a pedestrian happened in the United States (U.S.) earlier this year. The incident highlights the complexity of the interaction between humans and robot vehicles.

What are the trends telling us about the future of AI?

It’s very clear AI is going to be a massive force in the market. All the tech giants are adopting AI in major ways, they’re heavily investing in it, and the global amount of money spent on AI will be huge. Different countries are setting up AI strategies, and there’s going to be big competition for dominance in the AI space. Currently, intellectual leadership is in the U.S. But we’re seeing events such as the International Joint Conference on Artificial Intelligence (IJCAI) where there are more papers from China than the U.S., which 10 years ago was unthinkable.

AI has the potential to serve as a force for social good, helping us to address many complex societal problems we face today, such as those in public health, public safety and security, education, and conservation, to name just a few. In regards to public safety and security, AI can help optimize the use of limited security resources. It can help generate novel unpredictable patrol patterns that humans find very difficult to generate. We have conducted such work with the US coast guard for example.

What are the key causes for concern?

There are three main concerns about AI. One is the potential for automation to take over “much” of the work currently being done by humans, another is losing control over AI, and the third relates to ethics surrounding the use of AI, such as loss of privacy, and people’s data being used in nefarious ways.

These concerns are legitimate, and they need to be addressed. But at the same time, it’s important for us to continue to push development of AI in ways that will benefit humanity. We need to have a balance and make sure we emphasize the societal benefits of AI.

At GLOBE Forum you discussed the challenges AI needs to overcome to be successful – specifically, improving the AI literacy so that end users and regulators understand and trust the data they are given. Can you dive deeper, and suggest how we overcome this communication challenge?

Being able to explain decisions an AI system has made to an end user is very important. In many cases, we are working with vulnerable communities and populations, and we need to ensure they will not be harmed. Even if the answers provided by AI are correct, if the reasoning behind them is not transparent, they may be rejected.

For example, at GLOBE I spoke about using AI to identify poaching hot spots in vast nature conserves. That work helps determine where rangers patrol within parks that are thousands and thousands of square kilometres in size. With only a few hundred rangers on hand, we need to be able to explain why AI has identified these hot spots, otherwise we can’t justify sending the rangers.

Once the logic is properly explained, the end user may be able to analyze and identify errors in the process. It could be that, unwittingly, bias has crept into the results. Exposing bias can become possible once we understand why and how we came about the solution. So, there are many reasons why being able to explain what we did is very valuable.

There are different ways to do this. One approach is to design a system which only uses easily explainable AI tools, and which doesn’t use techniques or employ methods that are difficult to understand. This allows the explanation to be built into the system, but it can cause performance to degrade. The other approach is to let the AI system develop a solution itself, and then post hoc explain the reasoning through other processes. This approach could be taken in cases where performance is crucial.

How can businesses best leverage AI research?

In many cases the best data sets today are in the hands of industry already. Yes, the tools and techniques are being developed by the academics, but we don’t have access to the same level of data sets that industry has. Partnerships between industry and academia can be very mutually beneficial because more research can be done overall.

Championing partnerships that harness academia is crucial because, really, the power is in the data. Whoever controls the data can make huge industry headway. More complete data sets can also help to expose weaknesses in academic research.

It’s 2050…how has AI changed the world?

That’s a difficult and interesting question. We’ve attempted to predict to 2030 in our AI100 report.

The report is from an AI-100 study group and is titled, “AI 2030 in an Urban North American Setting.” In the report, driverless cars were our prime example of how AI will impact the urban North American population in terms of impactful lifestyle changes. We were thinking it would take at least 15 years before this became a reality, but in the last couple years research has progressed so rapidly that this timeline might be much faster.

It will also depend on where investments end up going. I certainly hope a lot will go towards AI that is focused on social good. Recently, there was a story in the LA Times where our mayor called homelessness in Los Angeles “a humanitarian crisis.” There’s a lot AI could contribute to benefit these low-resource communities, in part by addressing some of the major challenges we have in public health, housing, public safety and security, educational drop-out rates, and so on. I’m hopeful investment will go towards assisting these populations who are already not doing as well, and who may suffer further from loss of jobs because of AI.

That’s a more Utopian view of where AI could take us – so I will end there.

This article is part of our new six-part content series, “Echoes of the Forum”, which provides exclusive videos, interviews, and key takeaways and actions from our world-leading sustainable business event – GLOBE Forum.

Our first chapter focuses on the role of energy leaders and technology in accelerating the clean economy.

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By Ingrid Hoffmann, Consultant at The Delphi Group

Climate disclosure is closer than ever to becoming a part of mainstream financial reporting. One of the initiatives bringing it into the mainstream is the Task Force on Climate-Related Financial Disclosures (TCFD). Chaired by Michael Bloomberg, the TCFD is a private-sector led initiative under the G20. It has crafted a series of recommendations for climate change disclosure that apply to all industries (find out more). To date, more than 100 companies (including Barrick Gold, Shell and Unilever) around the world have signed up to support the TCFD and implement the recommendations. In addition, a combined 390 investor groups representing more than USD $22 trillion in assets signed a letter called upon G20 leaders to support the TCFD recommendations.

Scenario analysis: The new frontier

The recommendations are ambitious, and among the most challenging is scenario analysis. What does the TCFD mean by scenario analysis? That companies, ‘Describe the potential impact of different scenarios, including a 2-degree scenario, on the organization’s businesses, strategy, and financial planning.’

Scenario analysis in the context of climate change is an entirely new exercise for most companies. Because of investor pressure, companies are scrambling to conduct scenario analyses at a time when no best practices or standards exist for most sectors.

In light of this challenge, the TCFD held its first-ever North American event on the topic of scenario analysis on May 1st in New York. I was lucky enough to attend, alongside approximately 200 investors, issuers, regulators, and others. Over the course of the day, it became clear to me that it will take several years to agree on what scenario analysis should ultimately look like.

To standardize the scenarios…or not to standardize

The reporting community (including issuers, investors, non-profits and governing bodies) has not yet reached a consensus on how standardized scenarios ought to be. The TCFD built a small degree of standardization into the recommendations by suggesting all companies use a 2-degree scenario. At the moment, companies can determine what those 2-degree scenarios look like, and which other scenarios they decide to use (the recommended number is three to four in total).

On one end of the spectrum, advocates like Stan Dupre, CEO of The 2° Investing Initiative, propose that a third-party organization choose and design the scenarios that all companies use. This would (1) reduce costs, (2) eliminate the ability of firms to choose scenarios that are favourable to their existing business strategies, and (3) improve comparability for investors. This is the direction TCFD panelists, governing bodies, investors and non-profits largely leaned towards.

On the other hand, at the event Val Smith, Managing Director and Global Head of Corporate Sustainability at Citi, made the argument that complete standardization would undermine the value of projecting many different futures between companies, as you never know which one may be true. This position was favoured by issuers.

Today we are slowly moving in the direction of a middle ground. There are some industries, like banking, that are banding together through initiatives like the UNEP FI TCFD implementation pilot project to standardize scenarios for their sector.

A growing number of open-source and free resources are being made available to help companies with scenario analysis through organizations like the The 2° Investing Initiative, the Climate Disclosure Standards Board (CDSB), and the TCFD itself. These resources will reduce the barriers to entry for smaller companies, and reduce the variability in scenarios being used. Meanwhile, there will still be space for bigger firms with more complex climate risks to design their own scenarios. Whatever the final product looks like, it will take years of practice and negotiation to reach a standard approach.

Three tips for companies thinking about scenario analysis

While the future of scenario analysis may be unclear, I left the event with a few key take-aways that can help guide companies today:

1. Choose scenarios that are the most consequential to your business – Scenarios are not intended to be chosen based on their likelihood. They are not forecasts. When determining which scenarios to use, according to Peter Schwartz, Senior Vice President of Strategic Planning at Salesforce and former member of the Shell Scenarios Team, “It’s not a matter of which scenarios are the most right, it’s a question of which are the most consequential, and which ones would you regret not thinking about if they were to happen.”

1. Report substantively – For those companies that are reporting on scenarios now, few are commenting on the impacts on their business models. Investors will be less forgiving in the future to companies that do not appear to have a plan. According to Danielle Sugarman, Vice President of Investment Stewardship at BlackRock, “We want to avoid a box-ticking exercise, where companies say they’ve achieved what has been requested but without providing any meaningful information.”

1. Disclose material climate risks in financial filings – Many companies have resisted incorporating the TCFD recommendations in financial filings, citing legal barriers such as liability exposure arising from making forward-looking statements about climate-related risks. However, liability from reporting on climate change in financial filings is a red herring. According to Curtis Ravenel, Global Head of Sustainable Business and Finance at Bloomberg L.P. and member of the TCFD Secretariat, “A company is liable for not appropriately reporting on climate risk regardless of where the reporting occurs.” Ultimately, a company can reduce its risk of liability by disclosing according to the guidance of the TCFD, whether in financial filings or not. A company should instead approach the question of whether to include scenario analysis in financial filings by considering the materiality of climate risk.

When it comes to scenario analysis, there will be a lot of information to sift through over the coming months and years in terms of resources available, best practices emerging from different industries, opportunities for collaboration, and regulations that are starting to incorporate TCFD standards. We’ll be watching this evolution with a keen eye and will keep you updated on key developments.

Ingrid Hoffmann is a consultant with The Delphi Group. If you are a Delphi client and you would like to hear more about the TCFD Scenario Analysis session, please contact Ingrid at ihoffmann@delphi.ca.