Four Ways CEOs are Inspiring Mayors on Climate Action

Bhavini Patel | April 7, 2016

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Four Ways CEOs are Inspiring Mayors on Climate Action

Emma Stewart, April 4, 2016, with Katie Walsh, Cities Program Manager, CDP

 

  • Over thousands of years humans have built and settled in what we now call cities, and over the years some of those cities flourished as others perished. Many that perished believed that climate changes and extreme weather were the work of the gods, yet prayer and offerings were not enough to save them. They did not have the benefit of scientific evidence pointing to the causes of their predicament, and were unable to effectively mitigate the effects of increasingly unpredictable weather and its disruptions.

 

  • In 2016, we not only have scientific evidence of the causes of our climate change problems, but we have the techniques at hand to adapt to those changes. And we’re starting to understand why we should bother: reducing GHG emissions generates a long-term, high-return on investment, financial savings, new jobs, cleaner air and more livable cities. But only recently have we seen the leadership necessary to capitalize on these techniques to make climate action a reality.

 

 

  • Mayors’ day-to-day responsibilities now apply to more than half of humankind, and according to some political scientists, mayors lead more effectively than Heads of State because, in the immortal words of former NY Mayor La Guardia, “There is no Democratic or Republican way of fixing a sewer.” Nor, for that matter, protecting the air or water we all rely upon.

 

  • The historic Paris Climate Agreement signed this December provided a much-needed clarion call to those waiting in the wings for a clear regulatory and market signal. However, we already know that the national commitments made there miss the mark to keep global warming under the 2 degrees C necessary to avoid “dangerous and irreversible” climate change. So, it will be the “non-state actors” — cities and corporations acting on behalf of their citizens and their bottom lines – that will need to make up the gap.

 

What can Mayors Possibly Learn from CEOs?

  • On the surface, it may appear as though Mayors and CEOs have little in common.
  • But when it comes to climate change, they are both in the same boat, and the sea is rough.
  • Why do you think Mayor Michael Bloomberg, one of the few individuals who has been both CEO and Mayor, is so adamant about climate action that he was designated the first UN Special Envoy for Cities and Climate Change?
  • Today let’s look at 4 techniques currently in use by CEOs that could be adopted by Mayors (and in future discuss those that CEOs can learn from Mayors).

 

#1: Target-Setting that Moves us from “Better” to “Enough”

 

  • Until recently, cities and companies have been setting anemic greenhouse gas reduction targets and getting pats on the back for doing “better”. CDP analysis shows that, even when including companies currently lacking targets, at those rates, the reductions necessary to stabilize the climate at no more than a 2 degree temperature rise would be achieved 39 years after these two arrows crash into one another.

 

  • In contrast, a movement within the private sector called “Science-Based Targets” – started by BT and Autodesk back in 2009 — is prodding and supporting CEOs to set their greenhouse gas reduction targets in line with climate science, and do their “fair share” to stabilize the climate.

 

  • A consortium of non-profits and think tanks have since stepped up to guide companies through the 7 different methods for how to set science-based target (Science-Based Targets). The one Autodesk authored – C-FACT — has even been adapted for use by cities (C-FACT for Cities). Now at least 144 companies and roughly half as many cities have committed to GHG targets that are not just “better” but they are “enough” [1].

 

#2: Giving Muscle to Sustainability Champions

  • As recently as ten years ago, most corporations had no one officially focused on sustainability, let alone climate change more specifically. To the degree anyone was, responsibilities generally lay with Environmental, Health & Safety teams, whose main remit was to comply with basic environmental and occupational safety laws, certainly not influence business strategy. They never got near the C-Suite, let alone the Board Room.

 

  • In contrast, today – while the actual titles and degrees of power differ — almost every major company has a Chief Sustainability Officer (CSO). Those companies more mature in their sustainability endeavors grant these individuals more authority — some reporting directly to the CEO – and relegate the more generic aspects of the job to existing functions (e.g. Operations), freeing up the CSO to focus on new business opportunities, including greener product lines (see Miller, K. & G. Serafeim 2014). Now, cities are creating similar positions, or entire offices dedicated to sustainability pursuits like carbon footprinting, target-setting, and climate action plans. This launches them well beyond the waste management and sanitation “environmental” departments of old. In some cases, these individuals have significant cross-agency sway – and not only in regions where you might expect. In Savannah, Georgia, the new sustainability department reports directly to the Deputy City Manager because it is the only cross-agency department. In still others like Los Angeles, the city departments themselves are hiring their own sustainability officers, creating a network of allies across agencies.

 

#3 Financing Climate Action through Carbon Pricing

  • Annual corporate reporting suggests that more companies than countries now put a price on carbon. According to the World Bank, in 2014, 1000 companies and a handful of cities publicly advocated for a price on carbon. Even companies in regions without a national or regional price on carbon are voluntarily setting internal pricing as a planning tool to “help identify revenue opportunities, risks, and as an incentive to drive maximum energy efficiencies to reduce costs and guide capital investment decisions”. And in some cases (e.g. $60/metric ton at ExxonMobil, $40/metric ton at Royal Dutch Shell) the prices they choose are higher even than those set by regulators. One reason for the trend is purely to improve those companies’ ability to predict their costs in future, especially for those heavily reliant on fossil fuels and therefore more exposed to the risk of changes in cost. But then why are carbon-light companies like Microsoft and Google doing so? Because it helps them reward behavior they need to meet their sustainability goals while taxing behavior they don’t and – in so doing – raising funds for deeper sustainability investments.

 

  • Mayors would benefit from taking a page out of this CEO playbook. Some cities are starting to. Boulder, CO has added a tax to utility bills that funds the city’s sustainability department budget, while Asheville, NC redirected the money it saved in upgrading to LED street lighting back into non-revenue-generating sustainability initiatives, like educating citizens about waste.

 

#4: Comparable Reporting and the Power of Transparency

  • In 2010, some 3,000 corporations – including more than 400 of the largest 500 companies in the world – began voluntarily disclosing to investors their material climate change-related risks and opportunities. Since then, cities have begun to follow suit with help from two non-profit standards-bearers, CDP and WRI. 300 cities now voluntarily measure and disclose their environmental impacts annually, representing over 1.6 billion metric tons of greenhouse gas emissions and 4,800 different mitigation projects. Their reasons are similar to those of corporations: driving economic competitiveness through operational efficiencies, attracting new types of investors and improving their risk profiles.

 

Closing

 

  • In closing, over 400 cities and 400 corporations have made aggressive and voluntary commitments on climate action via C40, the Compact of Mayors, and the We Mean Business coalition. But in many cases it remains unclear how they will accomplish them. I propose that Mayors take advantage of these four techniques, which have now been prototyped by sustainability professionals in the corporate sector with counsel from environmental non-profits and researchers, had a few kinks worked out, and are now ready for consideration by the government sector.

 

  • But do not think for a second that I’m suggesting the learning need be one way. In my next installment: how Mayors are Inspiring CEOs on Climate Action!

 

  • In the meantime, please join us to learn more about how sustainable design can create smarter cities at autodesk.com. Thank you!

 

 

[1] Credit to Andrew Steer, President of World Resources Institute, for coining this phrase in September 2015

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