Wildfires, melting ice sheets, extreme weather events, the United Nations’ climate change report—take your pick; the message is clear: Climate change is a global imperative that requires less discussion and more action. But what exactly is being done, and whose responsibility is it?
Governments are enacting aggressive climate commitments. In 2020, China pledged to be carbon neutral by 2060. The European Union and Bill Gates’s Breakthrough Energy group plan to raise $1 billion through 2026 for low-carbon technologies to help Europe meet climate goals. President Biden promised a 50% to 52% reduction from 2005 greenhouse gas levels by 2030.
These are steps in the right direction, but from my perspective, governments aren’t equipped to solve climate change alone. Administrations change, and political tides shift, and with them can go their policies and plans. By contrast, in 2019, the Harvard Business Review found the “world’s best-performing CEOs” that year had retained their jobs for an average of 15 years. From my perspective, CEOs have the tools at their disposal to create a sustained, positive impact on the environment. More than the ability to make change, leaders of the world’s largest companies must drive change.
My company is a growth incubator for global businesses. My team helps large enterprises drive growth while tackling the world’s biggest problems through venture building and investing. From partnering with these multinational leaders over the past decade, here are five reasons I believe the world’s largest companies are positioned to help lead the global sustainability movement.
1. Many big companies produce huge carbon footprints.
Companies are a huge source of greenhouse gas emissions. Some of the most polluting industries include fuel, fashion, food production and transportation. From 1988 to 2017, just 100 companies emitted 71% of the world’s greenhouse gases, according to the Guardian. Given the pollution they create, a key initial step is for these organizations to maximize efforts to reduce their own carbon footprint.
2. Stakeholders demand greater corporate action.
Ever since BlackRock declared “Sustainability as Blackrock’s New Standard for Investing,” seemingly every board of every public company has added ESG to its agenda. I’ve observed large corporations pursuing cleantech ventures through internally driven venture building and externally focused venture investing in response to public consciousness, environmental regulations, incentives and corporate sustainability mandates. A 2020 Survey of Sustainability by KPMG found that 96% of the world’s 250 largest companies now report on sustainability performance.
However, investors, consumers and shareholders want more than reports. They expect meaningful changes and execution-driven programs. According to a 2020 study by IBM and the National Retail Federation, more than 75% of respondents said it’s at least “moderately important” that brands are “sustainable and/or environmentally responsible.” Mastercard, for example, even developed a carbon calculator that informs customers about the carbon footprint of their purchases and enables them to vote with their wallets.
3. Large companies can leverage their advantages.
Multinational companies can leverage their most powerful assets: their brands, talent, capital, technology, channels, customers, global reach, core competencies and partnerships. Their deep market traction and insights can accelerate their strategic investments in new sustainability solutions.
Many global giants also have the capital to fund sustainability-driven initiatives. In a 2018 study, the 1000 public companies that spent the most on research and development accounted for 40% of all R&D spending worldwide. Companies can consider earmarking funding for venture building and investing to help reinvent their core businesses.
4. In the war for talent, employees want the chance to change the world.
Younger generations are especially passionate—and informed—about carbon accountability, sustainability and climate change. Work that supports personal values can create a more engaged workforce. Furthermore, team members at large companies often have years of experience they can apply to the world’s biggest problems. While they might find launching an independent startup daunting, these seasoned professionals often make successful “intrapreneurs” who disrupt markets from inside their corporation or outside through investing in and partnering with startups aligned with their sustainability aspirations.
5. Large companies can build on their track records.
I’m finding the Global 1000 and all my company’s multinational clients are launching execution-oriented growth engines focused on organic venture building, venture investing, strategic partnering and tactical mergers and acquisitions. Many are focused on sustainable energy, climate tech, the circular economy and other green initiatives.
For example, Hitachi built an incubator/accelerator that brought a Silicon Valley mindset into the corporation. The company’s new business incubation process is focused around the environment and sustainability, including the buildout of electric vehicle fleet management and remanufacturing. Another example is Schneider Electric, which established SE Ventures and has seen success investing in and incubating startups focused on various sustainability initiatives. (Full disclosure: Hitachi and Schneider Electric are clients of Mach49.)
Similarly, beverage giant Anheuser-Busch InBev actively invests in circular ventures through its ZX Ventures arm and the 100+ Sustainability Accelerator. For instance, one company the brand helped progress uses an energy-efficient process to treat and reuse wastewater. MetLife is another company prioritizing innovation. One startup the company worked with through its accelerator program uses patients’ historical data to predict the early onset of cancer, according to a press release by the company.
These efforts are not, nor should they be, purely altruistic. I believe many organizations have shown they can build profitable and meaningful growth engines based on sustainability. To begin supporting climate initiatives in your own company, you can start with a teachable, repeatable and scalable methodology that integrates lessons learned from Silicon Valley. These lessons have been tested and proven to produce pipelines and portfolios of profitable new ventures.
Now is the time for the world’s largest companies to assume the mantle of leadership. Governments and NGOs cannot achieve zero-emission goals and mitigate climate change without them. Together, I believe society can work toward solving the world’s biggest problems.