COP26 - tech companies grapple with how to navigate climate crisis
The likes of Cisco, Microsoft, ServiceNow and Xerox debate how best to drive meaningful change, to reduce negative impacts on the environment, at COP26.
During the ongoing COP26 event in Glasgow, senior leaders from a range of technology companies came together on Friday last week to discuss how they could best help in reducing the harmful impact industrialization is having on the environment.
Shortly after, Greta Thunberg told activists that the whole UN-brokered event had been a failure and nothing more than a PR exercise, stating that the crisis could not be solved using the same methods that got us into it in the first place.
And this was the underlying tension that formed two technology CEO panels during the UNFCCC DEFRA Technology for Climate Action Conference that diginomica attended.
On the one hand technology leaders could point to a range of initiatives that they are behind to reduce their companies' carbon footprint, whilst on the other hand struggled to answer the fundamental question of whether the current capitalist system within which they enjoy success is compatible with the drastic change needed to save humanity from climate disaster.
I touched on this last week, where I shared my initial thoughts and said:
Ultimately these companies are driven by growth and profit metrics. Sustainability and climate responsibility are clearly seen as important, but ultimately most of the companies on stage are measuring success by the returns that are delivered to shareholders and how the share price looks on a quarterly basis.
There was hope amongst the technology leaders in attendance that a sustainable and green future could lead to new markets and new opportunities, and there was also optimism about the changes already being made in the powerful tech industry. But it can't be denied that there was also a quiet discontent that perhaps things weren't moving quickly enough. And no one could quite offer a solution as to how to speed that progress up.
Collaboration and transparency
One area that most of the companies in attendance could agree on was that this is absolutely not a crisis that can be solved in isolation. Industry needs to come together to collaborate and then hold itself to account through transparency.
Rob Lederer, chief executive of the Responsible Business Alliance (RBA), an industry body dedicated to corporate social responsibility in global supply chains, framed this point well and said:
In terms of the biggest challenge, it's working in the collective. The RBA started in the human rights and labor space - and that makes sense, nobody wants to be in a forced labor situation, nobody wants to be driving excessive working hours.
But in the environmental space, what we are seeing on emerging issues is companies almost looking at it as: how do we get a competitive advantage over another company if we get there first? And the real answer is that we have to work in the collective. We have to come together as industries to learn from each other, best business practices. Because that's how we're going to drive change.
So, again, whilst collaboration and coming together as an industry is key, Lederer goes straight to the heart of the issue - that companies are driven by competition and a lot of them are still figuring out how to make ‘green' a competitive advantage, rather than implementing change now as a matter of urgency.
Mark Basham, CEO of Axelos, the organization responsible for ITIL, PRINCE2 and MSP, had a more compelling response to the need for collaboration. His point is that if companies don't organize themselves around a green economy, then they will collapse. Basham said:
I think it's fundamental. I think organizations that fail to change, that fail to adapt, will fail. I think when you look at the stakeholder communities, whether they be traditional shareholders, whether they be customers, or increasingly employees, everybody's choosing to vote with their dollar and their feet and their time, to back and support sustainable businesses.
And quite simply, I think if business doesn't change, business will fail. Government therefore absolutely has to get off the fence and start to support them.
Clare Barclay, CEO of Microsoft UK, was also in attendance, where she pointed to some of the industry leading initiatives the company is undertaking. These include not only going Net Zero on carbon emissions, but by 2050 also removing from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.
But Barclay is also aware that companies like Microsoft, which impact thousands of other companies as part of its ecosystem, have real power to move the needle in the direction of positive change. She said:
Microsoft is a very large company. So we have done a lot of work on the whole of our supply chain, all of our procurement, all of our ordering, to make sure that we know what will remove things from our missions and what won't.
That has been published in a white paper that is publicly available on our website. We've taken a stance on being as open and transparent as we can. Collaboration and sharing really is the name of the game. Not everyone's got the right answers and we feel like the more open and transparent we can be on the things that we've learned on everything Microsoft procures, is an important basic step forward.
We are a company that works with millions of businesses globally, we have a wonderful ecosystem of partners that also build services and solutions on our technologies. So the opportunity to be an agent of change is actually quite powerful.
Establishing a baseline
Whilst the organizations in attendance generally agreed that transparency to drive progress is key, there was also a recognition that better data is needed and that measuring change isn't always easy.
Jon Pierre, chief executive of environmental monitoring solutions company Geotree, made this point well and said:
I think it's not just about corporations trying to offset carbon emissions. We speak about the young people, we have $50 to $100 trillion of wealth transfer taking place over the coming decades. So when we think about what these customers, these investors, these stakeholders are going to demand, they want to see finance and companies take into account things like nature and encouraging practices like sustainable agriculture.
And one of the key blockages, I'd say, is around: how do we actually measure and know that when companies and corporations say that they are going to invest in forestry, sustainable agriculture and everything else, so it's actually taking place on the ground?
Tom Burnet, chairman, non executive director and advisor at Kainos, agreed with Pierre that measurement is key, but took an optimistic position that the technology industry is filled with talent to make this happen. He said:
Fundamentally, our frustration with the situation we find ourselves in is that we're all engineers at Kainos. We like to get to the bottom of things and we like to be evidence based. Without really good data and a really good understanding of the problem and baseline of the problem, how on earth can we improve?
Because again, I think our belief as a firm is that, both as individuals and as a community, everybody wants to do their best. Everybody understands we're in a moment where actually we have to get on with change. But you know, what are we changing? And what are the best levers that we can pull to affect the best change?
We've got rooms full of data scientists who can go away, build models and hopefully give us a score, a number, which allows us to make some judgments about what we want to do as an organization and hopefully help our community be better informed.
The big C
So there was general consensus on collaboration, transparency and the need for better data and measurement practices. However, when asked about the ‘big C' - capitalism in this instance, not climate - the panels in question had differing responses.
Some see capitalism and competition as essential in driving the radical change needed, suggesting that governments will be too slow to act. For instance, RBA chief executive, Lederer, said:
I would say [capitalism is] essential. This whole room, this panel, there's example after example, where it's industry, individual businesses, that drive that change. Quite frankly, where governments just fail, industry steps in and drives that change, drives that consistency.
We talk a lot about combined leverage. And if you look at the combined leverage of the company's here, it's not unusual for a company to have 15,000 to 20,000 individual suppliers in their supply chains. And they all have code of conducts that they require their customers to follow, to drive that change. Money talks.
And its industry, that capitalist sort of approach to things that can really make a difference in driving something like climate change, through that combined leverage, through that collective approach - in many cases where governments can't. So I would say it's not only possible, but it's essential.
I'm not sure government failings and industry driving change is entirely accurate, given the role of government in the 2008 financial crisis and during the COVID-19 pandemic. And some of the other panelists suggested that actually its the markets themselves that aren't conducive to seeing the results we need.
For instance, Geotree's Pierre said:
On the point of capitalism and our current economic infrastructure and system, I think, obviously, a large part of the issue and why we're here today is because of a market failure. The market doesn't recognize the value of nature. For example, we haven't had a price on pollution. But we're slowly starting to see that that's changing.
If we could reorder the financial and economic system to actually take that into account, I think that's going to be a key enabler for us, as companies, to live up to those standards. I would love to see the day when Microsoft sends an RFP and the portfolio that comes out in the end is heavily skewed towards nature based solutions.
And it's not just because nature based solutions are nice for the environment, but also they have these multiple co-benefits. They tend to be beneficial for local communities, they have biodiversity benefits, benefits that are great for society generally, which, in my view, are probably superior to just machines sucking carbon out of the atmosphere.
ServiceNow VP and General Manager of UK & Ireland, Jordi Ferrer, said that the COVID-19 pandemic proves that change can happen quickly if we need it to, but what we are seeing with the climate crisis is a lack of leadership. He explained:
This is all about leadership. If you think about what happened with COVID-19, all of the things that were impossible happened in a matter of weeks. You couldn't run a contact centre from someone's home, you couldn't run a trading floor - I know someone was running a trading floor upstairs in their house.
The point is, all of the excuses had to go out the door, because it was about survival. Companies have to make the changes. I've been in the industry for a very long time and the amount of times that I've heard ‘no, we can't do that'. But there was no reason behind it. It was more the culture, it was just organizational inertia.
And to me, that is all about lack of leadership. Young people are bringing this vision of improving the future, and they're leading us. What we need to do is become leaders and really transform any of the obstacles out of the way.
Darren Cassidy, managing director for UK & Ireland at Xerox, also suggested that the market needs more incentive to change - and pointed to penalties for those being slow to adapt as a possible solution. He said;
In the end, one would hope that the consumers will make the right choice and therefore drive the demand, but it's going to take too long. The next generation are much more aware and I have confidence that they will make the right decision. Until then, to speed it up, my mind goes to incentives and penalties.
What could be done to incentivize good behaviour and penalize bad behaviour? And can we do that faster? Supply chains are global by nature and they don't exist in one country. So one of the things that I think we've got to get to grips with somehow is consistency in the structure across boundaries, across countries, across training zones, to enable these big global organizations to make the right decisions and drive the right action.
There's a number of things that need to happen to speed this up, because it won't happen naturally fast enough, in my opinion.
I walked away from the CEO panels with mixed emotions. On the one hand I was buoyed by the passion and understanding from some of the individuals on stage. On the other hand I could see that most of them were somewhat frustrated with the pace of change, clearly held back by the system within which they are operating. Being in attendance, it almost felt like a game of chicken and egg. There's a belief that a ‘green future' will provide stability and market opportunities, but there's also some confusion about how to get there quickly to make those opportunities a reality.
To draw comparisons to the technology industry itself, I was reminded of the early days of on premise vs cloud vendors, where the legacy companies were trying to satisfy their shareholders with the money on premise licences brought in, whilst trying to figure out how to get to the ideal state of ARR in the cloud. Obviously, the end result is much more grave when talking about the climate crisis. My personal opinion is that more regulation is needed and penalties need to be applied to those not moving quickly enough, as we need drastic action. Whilst money is to be made within the existing system, there's no real incentive for organizations to change quickly.