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One Key Move to Improve Private Sector-Led Environmental Problem Solving
The Investment Worth Making
There’s remarkable momentum when it comes to business getting involved in tackling environmental issues. It, therefore, feels like an opportune moment to step back and assess where we are and how we got here. Environmentalists are good at many things, but taking a victory lap usually isn’t one of them. We’re so focused on addressing the enormous challenges ahead, we sometimes forget to consider how far we’ve come. For private sector-led environmental problem solving, I have two key takeaways. One is about how we’ve made so much progress and the other is about how we can make even more.
Looking back, it's clear that we have helped open the eyes of the business world to the climate crisis and other environmental challenges. Even better, most business leaders now understand that there is significant upside in addressing these challenges and real downside to sitting this out.
What got us here?
I’d say one big reason for our advancement is the diversity of players now in the game. In addition to the business leaders themselves, the roster of key players includes:
“Centrist” NGOs who work closely with businesses on developing environmental strategies
“Campaigning” NGOs who criticize and target businesses who are off course, often chasing them into constructive projects with centrist NGOs
Coalitions of NGOs, academics, regulators, multilaterals, and private sector players bring the environmental community together on specific projects. Examples include the Science-Based Targets Initiative, the Taskforce on Scaling Voluntary Carbon Markets [Disclosure: I’m a member], and the World Business Council for Sustainable Development
Stakeholders—customers, employees, shareholders, community members—who more than ever before use their agency, speak up loudly, and push hard for progressive environmental action
Journalists who monitor and write about environmental concerns and shine a spotlight on both leaders and laggards
Academics who study the issues and data carefully in order to evaluate which actions really work
Environmental critics whose scrutiny draws attention to real shortcomings and helps ensure they will be addressed
Private sector consultants who are now getting in the ring to help companies improve on their execution of large environmental initiatives
The diversity of these constituents is a real advantage and offers clues on how we can continue to do better. Looking ahead, we should work to keep this broad coalition strong.
Of course, our big challenge remains the same—how do we build on our past achievements in order to get to scale in the fastest and most impactful way? After all, we do have a crisis on our hands.
For business leaders, the answer is simple: Please engage more with the environmental community.
You bring many advantages to the table. At your best, you know how to set long-term plans and hold your organizations accountable for achieving them over time. You’re good at mobilizing resources like technology and capital. You keep costs low. You move fast and do big things.
But when it comes to achieving positive environmental outcomes, please understand it's not business as usual. You need to think about much more than your P&L. You will be more successful when you work hand-in-hand with the environmental community. They know things you don't know. They can support you, provide credibility, and—importantly—give guidance or, if appropriate, criticize you when you’re off course.
And please remember, the business world is drawing on the environmental community’s past investments in building know-how, science, and standing. Recognize that you’re doing so and give back.
It's not difficult to build engagement with the environmental community. Many companies already do this very well—just ask them for some advice or introductions. But note that engaging in the way I’m recommending will take time, resources, and some genuine effort to build relationships. It won’t just happen all by itself.
I remember when I was tasked with building Goldman Sachs’ first environmental initiative way back in 2005. (I think we were ahead of our time.) It wasn't exactly obvious how best to start, so my colleagues and I decided to ask for help from experts. We went to see the leading NGOs, just to see what they could offer. We ended up being blown away by how smart they were and how much we could learn from them. And this from arrogant bankers who at the time were jokingly referred to as so-called “masters of the universe” (that moniker didn't last long).
But we took things one step at a time. First, we visited with NGOs to see who might be a good partner or advisor. I remember learning important things in all of these meetings—including from organizations that we ultimately did not pursue.
Next, we looked for projects we could do together with NGOs. We had to spend a bit of money here because NGOs are NGOs. They mostly don’t generate cash flow from operations but rely on donations. (Note: some NGOs won’t even accept funding from businesses.)
It took some effort, making new friends and spending a bit of money. And we had to engage in good faith. We didn’t always agree, and we had to listen to their points and not just blow them off because we had the financial upper hand. We did our best to become respectful members of the environmental community.
Our experience with NGOs was a very positive experience. We launched a number of projects together—some were very successful, all were great learning opportunities.
For those who haven’t done so yet, I recommend that you take the first steps.
Visit DC (where most NGOs are headquartered), meet with some NGOs and start getting to know them.
Follow up with the ones you like best.
Choose some to support and explore potential projects you could do together. Ask for their input and listen carefully. Invite the NGOs to tell you what they think you should do and how they can help. And remember to ask how you can help and support them too. These things should go both ways.
This is much easier to do now than in the past.
One shortcut would be to join one of the many consortiums of private sector and environmental community players such as the Science-Based Targets Initiative. Another convenient way to do this is to participate in working groups organized by the World Economic Forum or other similar initiatives.
These groups are tackling significant opportunities, like the government policies we need. And the more people that get involved, the less audacious it will seem. There is safety in numbers.
In the next issue, I’ll discuss the one thing NGOs should do to improve engagement by the private sector.
In the meantime, let’s recognize that we have truly come a long way. And many of the big wins to date have been business-NGO partnership projects. I hope to see more of them in the future.
And with the expanded set of players now in the game, we have many more resources to draw on. Let’s leverage that. We’re all better off when we join together, using all of our comparative advantages to solve our collective environmental challenges.
This brand new report by the IEA outlining the energy sector’s roadmap to net-zero by 2050 is a big deal. As UK journalist Ambrose Evans-Pritchard phrased it in his summary for The Telegraph, “Net-zero makes us richer and cuts energy costs for the poor.” Well said. It’s a great primer for businesspeople wondering what the next few decades will look like.
It's getting hard to keep up with all of the financial sector’s many new initiatives and innovations connected to making environmental progress. I say bravo! Keep it up. Here’s my old firm Goldman Sachs’ move beyond green bonds: green equity. Other firms are on this too. It will be interesting to see if this idea catches on.
We talk a lot in this newsletter about the power of various stakeholders to push business to do the right thing. Here’s a good take from the WEF on how consumers drive sustainability.
One Last Thing
Our subscribers are very well-read, so you probably all have already read Adam Grant’s best-selling book, Give and Take: Why Helping Others Drive Our Success. Please take another look at the book with the environmental community in mind. I think if all of the diverse constituents in the enviro world (noted above) would prioritize Grant’s advice, we would see progress accelerate, period.